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MOSL: MAHINDRA CIE (Buy)-Ahead of the curve in identifying EV prospects-Ample opportunities in BEV to help mitigate potential weakness

Mahindra CIE: Ahead of the curve in identifying EV prospects; Ample opportunities in BEV to help mitigate potential weakness in powertrain/gearbox components

(MACA IN, Mkt Cap USD1.4b, CMP INR240, TP INR297, 24% Upside, Buy)

We attended Mahindra CIE’s (MACA) Investor Meet, where Mr Inigo Loizaga, Engineering Director, CIE Automotive Group, provided updates on technological trends in the automotive industry (click here for the presentation). According to Mr Loizaga, CIE is ahead of the curve in terms of developing new technologies for electric vehicles (EVs). He also expressed optimism that evolving opportunities within BEV and PHEV components (aluminum, stamping and plastic) could more than compensate for the potential threat to powertrain and gearbox components, and that macro trends like increasing outsourcing could benefit companies like CIE and MACA.   

 Key highlights:

• Over the last several decades, the automotive industry has seen multiple evolutions, from injection systems (from carburetor distributor to GDi 350bar), to auxiliaries electrification (e.g. hydraulic steering to electric steering and amplification in the braking forced changing from air/vacuum to electrically driven force) to materials usage (e.g. casted crankshafts to forged crankshafts).
• According to management, CIE has always been ahead of the curve to anticipate changes in the automotive industry to best meet technology requirements of OEMs in all markets and segments where it operates.
• CIE has demonstrated its presence in critical EV components. It is already supplying products to leading EV OEMs globally such as Renault, Nissan, Tesla, Mahindra Reva, Magneti Marelli, and Bosch, among others.
• CIE is also engaged in the supply of aluminum and machining components (such as platine assembles, battery supporter, end plate and housing trans case) to Renault, metal stamping components (battery structure, winding hub, battery cover) to Renault and Nisan, stamping and welding components (corners, skid plates, floor, battery wall, cross member) to Tesla, and rotor components to Borg Warner.