Upcoming Multi-Purpose Vehicle Launch To Boost M&M’s Growth, CLSA Says
The upcoming Mahindra & Mahindra Ltd.'s multi-purpose vehicle launch due this financial year-end could boost growth for the automaker if designed well and priced right, according to a report by brokerage house CLSA.
The broking firm also expects a pick-up in the rural economy to benefit the Anand Mahindra-led company.
The government has accelerated rural spend in the past two years and aims to double farm incomes by 2022. Its rural focus should sharpen over the next 12-18 months as elections are due in first half of 2019 (H1CY19). M&M should be a key beneficiary, given its high exposure to the rural economy.CLSA Research Report
Also Read: M&M's September Sales Jump 16%; Forays Into Construction Equipment Business
Commenting on the commercial vehicles and tractor segment, CLSA said that the automobile manufacturer's volume growth is on an uptrend, led by strong demand in tractors and a cyclical recovery in light commercial vehicles.
Besides, the SUV business has been a drag but even its volumes are recovering on a low base, it said.
Also Read: Non-Farm Income Driving Rural Demand, Says Mahindra's Jejurikar
The volumes and earnings per share are likely to grow at a compounded annual growth rate of 11 percent and 13 percent, respectively over FY17-20.
CLSA has upgraded M&M's stock rating to ‘Buy' from ‘Outperform' and hiked its target price to Rs 1,610 from Rs 1,585, a potential upside of 25 percent from Wednesday's closing level.
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