Motilal Oswal - MOSL: Morning India (11/February/19): 1. MM (Mix, discounts, RM inflation dent margins); 2. BPCL; 3. Tata Steel; 4. United Breweries; 5. Aurobindo Pharma; 6. NHPC; 7. Consumer

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Motilal Oswal

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MOSL: Morning India (11/February/19): 1. M&M (Mix, discounts, RM inflation dent margins); 2. BPCL; 3. Tata Steel; 4. United Breweries; 5. Aurobindo Pharma; 6. NHPC; 7. Consumer

MOrning India (11/February/19): 1. M&M (Mix, discounts, RM inflation dent margins); 2. BPCL; 3. Tata Steel; 4. United Breweries; 5. Aurobindo Pharma; 6. NHPC; 7. Consumer

Today’s top research idea

Mahindra & Mahindra: Mix, discounts, RM inflation dent margins; expect RM softening in FY20

Revenues (incl. MVML) increased 12% YoY to INR128.9b (in-line), led by higher volumes (+11% YoY) and realizations (+1% YoY to ~INR550.9k v/s our estimate of INR555.1k).
Auto PBIT margin shrank 260bp YoY (-210bp QoQ) to 5.8%, led by the impact of RM inflation (~120bp) and higher discounts (~40bp). D&A expense related to XUV300 (~70bp) also impacted profitability.
Tractor EBIT margin contracted 130bp YoY (-100bp QoQ) to 19.2%.
MM expects (a) tractor industry to remain flat in 4Q, implying 10% growth in FY19 (prior expectation: 12-14%) and (b) PV industry growth of 4-6% in FY19 (prior expectation: 7-8%).
While we maintain our FY20/21 EPS estimates, we cut the core business multiple to 14x (v/s 15x) to factor in the uncertainties around tractor volumes and BS6 challenge. Maintain Buy with an SOTP-based TP of INR841 (Mar'21E).

Piping hot news

SBI, Oriental Bank put on sale stressed accounts to recover dues of Rs 5,740 cr

State-owned State Bank of India and Oriental Bank of Commerce have put on sale various financial accounts to recover dues of around Rs 5,740 crore. The country's largest lender SBI has invited bids from asset reconstruction companies (ARCs) and financial institutions (FIs) to recover an outstanding of Rs 4,975 crore.

11/02/2019 44 EN

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MOSL: Morning India (11/February/19): 1. M&M (Mix, discounts, RM inflation dent margins); 2. BPCL; 3. Tata Steel; 4. United Breweries; 5. Aurobindo Pharma; 6. NHPC; 7. Consumer

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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