Analyst Corner: ‘Buy’ on M&M, disruption likely during BS-VI transition

By: |
Published: January 3, 2020 2:17:20 AM

We estimate UV volumes to decline ~20% in FY20, implying 38% residual decline, due to expectation of disruption during BSVI transition.

Analyst Corner, M&M, BS-VI transition, Domestic passenger UV, FES Sector, BSVI productsUVs (including pick-ups) declined ~2% YoY to 33k units (v/s est. 30k units).

Tractor volumes grew ~3% YoY to ~18k units (v/s estimated 16k units). We have factored in ~6.5% decline in tractor volumes for FY20, implying 9% residual growth. We see downside risk to our tractor volume estimates. UVs (including pick-ups) declined ~2% YoY to 33k units (v/s est. 30k units). Domestic passenger UVs grew ~10% YoY while the domestic pick-up segment declined ~2% year-on-year.

We estimate UV volumes to decline ~20% in FY20, implying 38% residual decline, due to expectation of disruption during BSVI transition. 3W volumes increased ~15% YoY to 5.4k units. Commenting on the performance, Veejay Ram Nakra, chief of sales & marketing, automotive division of M&M, said, “Our performance in the month of December is as per year-end sales outlook and currently we are also comfortable with our overall stock levels. As we get into the new year, we are fully equipped to roll out our BSVI products and have taken all requisite measures for a smooth transition over the next three months.”

Commenting on the performance, Rajesh Jejurikar, president – FES Sector, M&M, said, “We have sold 17,213 tractors in the domestic market during Dec’19 with a growth of 4% over last year. Tractor demand looks positive in the near term led by the expectation of better rabi output, supported by crop prices and government thrust on irrigation, rural infra and agri sector. In the exports market, we have sold 777 tractors.” The stock trades at 15.7x/14.4x FY20/FY21E consolidated EPS.

Maintain Buy.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Route Mobile to raise Rs 600 crore through IPO, gets Sebi nod
2Operation twist-III: RBI to buy, sell debt worth Rs 10,000 crore each; key details
3Sensex rallies 320 points, Ultratech, Reliance, HDFC twins up; check key reasons