MAHINDRA & MAHINDRA LTD - Quantamental Equity Research

Quantamental Equity Research on MAHINDRA & MAHINDRA LTD | Release: 19 Feb 2019 16:36:19 UTC+05:30 | Reporting Currency: INR | Trading Currency: INR | Exchange:NSE/BSE NSE CODE:M&M and BSE CODE:500520
Last Close:  INR 627.55
Fair Value:  INR 986.9
Est. Price by Mar 19:  INR 981.6
Market Capitalization (INR Crs):  78016.55
Industry:  Cars & Utility Vehicles
Rating:  STRONG BUY
Upside:  57%
Company Profile
Mahindra and Mahindra Limited is engaged in the manufacture of passenger cars, commercial vehicles and tractors.
Growth Per Share
Particulars 1-Year 3-Year 5-Year  
Revenue % 10% 44% 79%  
EBIT % 43% 92% 82%  
Earnings % 103% 139% 83%  
Book Value %  24% 43% 85%  
Stock Total Return %  25% 32% 86%  
Share holding pattern
Particulars %age   
(A) Promoter & Promoter Group 26.36  
(B) FII/FPI 32.98  
(C) DII/Insurance Companies 21.85  
(D) Public holding < 2 lakhs of cap. 7.28  
(E) Others 11.53  
Grand Total 100.00  
Fundamentals (Historical and Estimated)
Particulars Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18  Mar-19 E   Mar-20 E   Mar-21 E   Mar-22 E   Mar-23 E   
Price 261 369 351 431 509 606 642 644 803 982 1155 1307 1437 1544  
Return on Equity 24% 22% 19% 21% 20% 12% 12% 12% 20% 12% 13% 13% 13% 12%  
Price to Earning  12.7 14.8 13.9 12.8 13.5 24.0 25.3 21.6 13.3 24.0 24.0 24.0 24.0 24.0  
EVTI 1.3 1.5 1.0 1.1 1.2 1.4 1.4 1.3 1.4 1.5 1.6 1.6 1.6 1.5  
EVTIFM 12.7 14.8 13.9 12.8 13.5 24.0 25.3 21.6 13.3 24.0 24.0 24.0 24.0 24.0  
Price to Book Value 3.1 3.2 2.6 2.6 2.7 2.9 3.0 2.7 2.7 3.0 3.1 3.1 3.1 2.9  
Debt to Equity  1.4 1.2 1.4 1.4 1.5 1.5 1.6 1.6 1.5 1.3 1.0 0.8 0.7 0.5  
Dividend Yield 2% 1% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%  
Cash Flow to Firm 6% -3% -2% 3% 3% 10% 10% 5% 1% 8% 7% 7% 7% 7%  
Detailed Estimates
Title Mar-18 Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
Sales     92,093.95   100,733.40   109,080.02   116,923.49   124,050.31   130,252.83  
EBITDA     17,592.51     15,731.69     16,489.79     17,090.88     17,512.37     17,736.72  
EBIT     14,312.61     12,144.09     13,324.87     14,298.83     15,049.26     15,563.80  
PBT     10,325.52       8,157.00       9,593.82     10,858.70     11,939.53     12,827.75  
NPAT       7,510.39       5,081.72       5,976.84       6,764.84       7,438.19       7,991.53  
Price to Earning             13.29            24.01            24.01            24.01            24.01            24.01  
Price to Book Value              2.71              2.96              3.10              3.12              3.06              2.94  
Debt to Equity               1.52              1.27              1.04              0.84              0.66              0.50  
Return on Equity              0.20              0.12              0.13              0.13              0.13              0.12  
Enterprise Value to Total Income (EVTI)              1.45              1.52              1.55              1.57              1.56              1.54  
Enterprise Value to Total Income to Firm Margin(EVTIFM)            23.12            41.01            41.48            41.80            42.00            42.11  
Price or Est. Share Prices          803.11          981.60       1,154.55       1,306.80       1,436.90       1,543.80  
DISCOUNTED CASH FLOW
Title Mar-19 E Mar-20 E Mar-21 E Mar-22 E Mar-23 E  
PBT       8,157.00       9,593.82     10,858.70     11,939.53     12,827.75  
Interest       3,987.09       3,731.04       3,440.13       3,109.73       2,736.05  
Depreciation       3,587.59       3,164.92       2,792.05       2,463.11       2,172.92  
Cash Flow Before Tax     15,731.69     16,489.79     17,090.88     17,512.37     17,736.72  
Tax Rate            33.99            33.99            33.99            33.99            33.99  
Cash Flow After Tax     10,384.49     10,884.91     11,281.69     11,559.91     11,708.01  
Terminal Cash Flow                                                                                    -     183,218.59  
Total Cash Flow     10,384.49     10,884.91     11,281.69     11,559.91   194,926.60  
Present Value of Cash Flow   155,157.71  
Debt     32,472.20  
Value of Equity   122,685.51  
Fair Value Per Share          986.90  
Equity          78,017
Debt          55,898
Beta Take from Reuters 0.83
Risk Free Rate Prevailing Yield in India 7%
Market Risk Premium Assuming 8.82% premium for Equity Investments 7%
Interest Paid            3,987
Tax Benefit               914
Interest Net of Tax            3,073
Debt          55,898
Cost of Debt 5%
Cost of Equity 13%
Debt Weight 42%
Equity Weight 58%
WACC 10%
Cash Flow of Mar-23 E     11,708.01
Growth 2.4%
Present Value of Terminal Cashflow   183,218.59
Peer Comparision
# Name CMP Rs. Mar Cap Rs.Cr.  B.V. Rs. Annualized ROE % ROCE % Latest EVTI Latest EVTIFM CMP / BV P/E Debt / Eq Div Yld % Growth Rate R % SGR % Ann Total Income Unpledged Prom Hold % PQEIOI QoQ Sales % Qtr Sales Var % QoQ Profits % Qtr Profit Var % Graham's Number Rs.
   1  Maruti Suzuki        6,930.05        209,343       1,382.33            17.39            23.98              2.11            70.85              5.01            27.59                 -                1.15            11.95          242.37          82,342            56.21               366          -12.33              2.00          -33.53          -17.22       2,794.94
   2  Bajaj Auto        2,825.95          81,774          704.48            29.99            30.96              1.94            22.73              4.01            17.42              0.01              2.12            17.65        -151.45          31,996            49.30               130            -7.52            16.00            -2.85            20.49       1,603.43
   3  M & M           627.55          78,017          295.81                 -              13.64                 -                   -                2.12            13.62              1.52              1.20                 -                   -                   -              19.87                 -                   -                   -                   -                   -            634.09
   4  Eicher Motors      20,234.10          55,188       2,867.26            37.61            49.40              4.80            32.50              7.06            26.04              0.02              0.54            31.85        -426.96          10,119            49.35               160            -2.79              3.18            -2.88              2.39       7,081.86
   5  Hero Motocorp        2,696.45          53,855          635.14            31.66            46.10              1.43            19.35              4.25            14.87                 -                3.52            15.42            93.93          32,210            34.63                 93          -13.49              7.53          -21.22            -4.51       1,609.89
   6  Tata Motors           161.65          50,945          301.72          -80.95              8.55              0.43            17.46              0.54            48.74              0.93                 -            -80.95          -55.76        198,275            40.11               116              6.78              4.95       2,473.66          -40.87                 -  

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