Maintain ‘buy’ on Mahindra CIE with a TP of Rs 298

By: | Published: April 24, 2018 3:49 AM

Consol. revenue grew 27% YoY to Rs 2,000 crore (est of Rs 1,660 crore), driven by strong volume growth in India/Europe and rupee depreciation.

Mahindra CIE, India, Europe, EBITDA, bfl mexico, Bill Forge Mexico,  Hyundai, kiaIndia revenue grew 26% YoY (17% QoQ) to Rs 830 crore, driven by strong growth in the castings, forgings and gears divisions, and BFL.

Consol. revenue grew 27% YoY to Rs 2,000 crore (est of Rs 1,660 crore), driven by strong volume growth in India/Europe and rupee depreciation. EBITDA increased 37% YoY to Rs 260 crore (est of Rs 230 crore), with the margin of 13% missing our estimate of 13.7% due to absorption of higher RM costs in the EU (to be passed on subsequently). PBT grew ~62% YoY to Rs 190 crore (est of Rs 140 crore). India business revenue grew 26% YoY (17% QoQ) to R830 crore, driven by strong growth in the BFL, castings, forgings and gears divisions. EBITDA increased ~50% YoY (+41% QoQ) to `110 crore, with the margin expanding 220bp YoY (+240bp QoQ) to 13.9%, led by a favourable mix and operating leverage. PBT grew 88% YoY (+138% QoQ) to R96.7 crore, also benefiting from Rs 10.7 crore of FX gain at BFL Mexico.

Won orders from Kia and Hyundai in the foundry and forging divisions, respectively; revenue contribution to begin from CY19. (b) BFL’s Mexico plant ramp-up is on track; complete ramp-up is likely by September-19, with peak revenue of $30-35 m pa (c) New projects and ramp-up in existing projects at Metalcastello, MFE and Lithuania would enable MCIE Europe to outperform market in CY18. (d) In EU business, most customers have agreed for price increases for commodity inflation.
EBITDA of Rs 260 crore (est of Rs 230 crore) grew 37% YoY (+13.3% QoQ). EBITDA margin of 13% (+100bp YoY, -40bp QoQ) came in lower than our estimate of 13.7% due to absorption of higher RM costs in the EU business (to be passed on subsequently).

India revenue grew 26% YoY (17% QoQ) to Rs 830 crore, driven by strong growth in the castings, forgings and gears divisions, and BFL. Growth of 3-4% is attributable to price increases to pass on commodity cost inflation. PBT grew 88% YoY (+138% QoQ) to R96.7 crore. PBT benefited from a positive exchange rate effect (Rs 10.7 crore) in Bill Forge Mexico. This would translate into 100bp margin accretion on pass-through in the next quarter. Consequently, EBT grew 46% YoY (flat QoQ) to Rs 93 crore. Maintain Buy with a TP of Rs 298.

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.

Switch to Hindi Edition