Most brokerages have hiked target price while maintaining their stock rating on Mahindra & Mahindra Ltd., after the company reported it April-June quarter results on Friday.
The automobile manufacturer's net profit in the June-ended quarter stood at Rs 766 crore, declining 19.7 percent, the most in over two years, as passenger vehicle sales fell ahead of the implementation of the Goods and Services Tax regime.
Here's what brokerages had to say about M&M's earnings:
CLSA
- Stock Rating: Maintains ‘Outperform'
- Target Price: Hiked to Rs 1,585 from Rs 1,550
- Good monsoons and new launches to boost volume growth
- Q1 results impacted by GST-related provisions
- Fine-tune estimates and expect M&M to deliver a healthy 12 percent earnings per share (EPS) compounded annual growth rate (CAGR) overFY17-20
- Concerns on competitive pressures in the SUV segment and risk of a cyclical slowdown in tractor industry growth by FY20 limits from taking a more positive stance
Credit Suisse
- Stock Rating: Maintains Outperform
- Target Price: Hiked to Rs 1,680 from Rs 1,530
- Q1FY18 continues to do well with margins
- Lower two-wheeler loss guidance is encouraging
- Launch of U321 festive season demand can help volume growth in second half of FY18
- Expect inventory restocking (post GST transition),
- Adjust our numbers for the margin beat and the tax rate change
- Increase TP as we roll forward and increase multiple to nine times estimated value (EV)/EBITDA
JP Morgan
- Stock Rating: Maintains ‘Overweight'
- Target Price : Unchanged at Rs 1,600
- Headline earnings hit by GST transition
- Earing remained in line with estimates
- The results reinforce our view that an improved outlook for M&M's rural portfolio
- Growth in light commercial vehicles (LCVs) offset concerns about market share losses in urban UVs
- Investment book value remains intact, in our view
- Farm business continues to have a positive year, with tractor business delivering market share improvement
- Automotive business sees 9 percent EBIT decline
- Urban utility vehicles (UVs) remain under pressure; Bolero/Scorpio volumes show stabilisation
- With the company increasing investments in the Electric Vehicle(EV) space, losses there will likely go up
- Subsidiary delta seems positive
- Outlook of 10-12 percent volume growth in FY18
- Two-wheeler (2W) losses come down and Mahindra and Mahindra Financial Services (MMFS) earnings contribution improves sharply
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