Result Update

M&M - Q3FY19 Result Update


Despite reversal of the negative aspects affecting demand such as higher oil prices, commodity costs, tighter liquidity, etc, demand has failed to recover. Management expects sentiments to improve from April. Demand post implementation of BS-VI remains unclear. On the tractor front, management does not expect a double digit growth in FY20 given strong volume growth in the past three years. We value M&M based on SoTP valuations and have a “Hold” rating on the stock. We value the core business at Rs 600 per share, based on PE of 15x of our FY20E EPS of Rs 40. We have valued total investments (listed and unlisted) at Rs 103 per share, with a holding company discount of 25%. Our SoTP value for stock comes at Rs 703 per share.

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