Report
Jinesh Gandhi
EUR 120.00 For Business Accounts Only

MOSL: MAHINDRA CIE (Buy)-Revenue beat in both India and EU; lower tax boosts profitability

MAHINDRA CIE: Revenue beat in both India and EU; lower tax boosts profitability

(MACA IN, Mkt Cap USD1.2b, CMP INR242, TP INR295, 22% Upside, Buy)

 

Optimistic about 2HCY21 for India and EU

  • MACA’s strong performance in 2QCY21 was driven by strong revenue trajectory in India and the EU, and benefit of cost cutting in the EU.
  • We largely maintain our EPS estimates, despite a good beat in 2Q, as we build in impact of semiconductor shortages in 2HCY21. We maintain our Buy

 Strong all round performance, led by management initiatives

  • Consolidated revenue declined by 6.7% QoQ (+178% YoY) to ~INR20.4b in 2QCY21 (est. INR18.2b), led by a beat in both geographies as there was a 6% QoQ benefit of steel price pass through.
  • EBITDA margin contracted by 40bp QoQ to 12.7% (est. 12.5%). EBITDA fell 9.4% QoQ (LTP YoY) to ~INR2.6b (est. INR2.3b). Lower tax restricted the PAT decline to 10.4% QoQ at INR1.36b (est. INR1.1b).
  • India business revenue declined by ~16% QoQ (253% YoY) to ~INR9.3b (est. ~INR7.8b). EBITDA margin fell 150bp QoQ to 12.2% (est. 12.8%). Sales fell sharply in May’21 (30% sales drop), but Jun’21 witnessed positive sales, which reached 85% of 1QCY21 levels.
Underlying
Mahindra CIE Automotive

Mahindra CIE Automotive Limited is an auto components supplier with presence in many technologies, which include forgings, castings, stampings, magnetic products and composites. The Company is focused on the automotive market, including cars, utility vehicles, commercial vehicles and tractors. The Company's Forgings business offers crankshafts, stub axles, forged and machined parts, front axle beams and steel pistons, flashless near nett forgings and forged steel parts; Stampings business offers sheet metal stampings, components and assemblies; Castings business offers turbocharger housings, axle and transmission parts; Magnetic Products business offers soft and hard magnets, and magnetic induction lighting; Composites business offers compounds, components, and products, and Gears business offers engine gears, timing gears, transmission gears, transmission drive shafts and crown wheel pinion. It operates in India, Italy, Spain, Lithuania, Germany and the United Kingdom.

Provider
Motilal Oswal
Motilal Oswal

​Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance. 

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

Analysts
Jinesh Gandhi

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