Mahindra and Mahindra Result Updated

3QFY2012 Result Update | Automobile
February 7, 2012
Mahindra and Mahindra
BUY
Performance Highlights
CMP
Target Price
Y/E March (` cr)
3QFY12
3QFY11
% chg (yoy)
Angel est.
% diff
8,387
994
11.9
635
6,121
924
15.1
617
37.0
7.6
(324)bp
2.9
8,041
962
12.0
654
4.3
3.3
(11)bp
(2.9)
Net sales
Adj. EBITDA
Adj. EBITDA margin (%)
Adj. PAT
Source: Company, Angel Research
Mahindra and Mahindra (MM) reported mixed results for 3QFY2012.

The company registered better-than-expected top-line growth, led by robust
volume growth. However, net profit was below our estimates on account of
margin contraction due to higher purchases from its manufacturing subsidiary,
Mahindra Vehicle Manufacturers Limited (MVML). We have lowered our earnings
estimates for FY2012/13 by 6.8%/7% to factor in lower tractor volumes
(8% growth in FY2013E from 12% earlier) and higher purchases from MVML.
Nevertheless, due to attractive valuations, we maintain our Buy view on the stock.
Margin pressures persist, impact results: For 3QFY2012, MM reported robust
revenue growth of 37% yoy (13.9% qoq), driven by 47.4% and 23.2% yoy
revenue growth in the automotive and farm equipment segments (FES),
respectively. EBITDA margin at 11.9% (adjusted for reversal of forex loss) declined
by 324bp yoy, primarily due to increased purchases of finished products (up
265% yoy and 75% qoq) from MVML. Thus, adjusted net profit grew by modest
2.9% yoy (down 17.4% qoq) to `635cr. Additionally, a 37.8% yoy (12% qoq)
increase in depreciation expense impacted the bottom line. Quarterly results
(considering MM and MVML) registered a healthy performance, with EBITDA
margin at 13.4% and adjusted net profit posting 11.6% yoy growth to `679cr.
Outlook and valuation: We expect MMs automotive segment to be the key
volume driver (expected to register a 20.5% CAGR over FY2011-13E) going
ahead, backed by the strength of the passenger utility vehicle (UV) and
four-wheeler pick-up portfolio. For FES, we have revised our volume (10.7%
CAGR over FY2011-13E) estimates downwards, in-line with managements
guidance. We have also cut our earnings for FY2012E/13E to reflect margin
pressures on account of increasing contribution from MVML. Nevertheless, given
the attractive valuations, we maintain our Buy rating, valuing the stock on SOTP
basis. Our revised SOTP target price works out to `795, wherein its core business
fetches `609/share and value of its investments works out to `186/share.
`689
`795
Investment Period
12 Months
Stock Info
Automobile
Sector
Market Cap (` cr)
42,331
Beta
1.0
52 Week High / Low
875/585
Avg. Daily Volume
218,106
5
Face Value (`)
17,622
BSE Sensex
Nifty
5,335
Reuters Code
MAHM.BO
Bloomberg Code
MM@IN
Shareholding Pattern (%)

Promoters
25.3
MF / Banks / Indian Fls
30.6
FII / NRIs / OCBs
35.8
Indian Public / Others
Abs. (%)
Sensex
MM
8.3
3m
1yr
3yr
0.3
(2.3)
89.5
(17.4)
3.1 402.0
Key financials
Y/E March (` cr)
Net sales
% chg
Adj. profit
% chg
Adj. OPM (%)
EPS (`)
P/E (x)
P/BV (x)
RoE (%)
RoCE (%)
EV/Sales (x)
EV/EBITDA (x)
FY2010
18,363
42.1
2,029
158.1
14.8
35.9
19.2
5.0
31.0
23.2
1.7
13.0
FY2011
23,044
25.5
2,537
25.0
13.0
43.2
16.0
3.9
28.0
21.6
1.3
11.0
Please refer to important disclosures at the end of this report
FY2012E
30,397
31.9
2,745
8.2
11.9
44.7
15.4
3.1
22.8
20.8
1.0
9.1
FY2013E
35,422
16.5
3,117
13.6
11.8
50.8
13.6
2.6
20.9
20.1
0.9
7.9
Yaresh Kothari
022-39357800 Ext: 6844
yareshb.kothari@angelbroking.com
Mahindra and Mahindra | 3QFY2012 Result Update
Exhibit 1: Quarterly performance (Standalone)

Y/E March (` cr)
3QFY12
3QFY11
yoy chg (%)
2QFY12
qoq chg (%)
9MFY12
9MFY11
yoy chg (%)
Net Sales
8,387
6,121
37.0
7,361
13.9
22,481
16,716
34.5
Consumption of RM
22.9
4,454
5.1
13,249
10,432
27.0
58.9
62.4
4.5
1,283
1,019
5.7
6.1
75
3,161
1,043
14.1
6.2
3.6
1,990
1,626
8.9
9.7
4,680
3,810
(% of sales)
55.8
62.2
Staff costs
450
348
(% of sales)
Purchase of traded goods
5.4
5.7
1,555
426
(% of sales)
18.5
7.0
Other Expenses
708
614
8.4
10.0
(% of sales)
Total Expenditure
60.5
29.4
430
265
887
5.8
12.1
15.3
683
9.3
25.9
203
22.4
7,393
5,197
42.2
6,455
14.5
19,684
14,121
39.4
Operating Profit
994
924
7.6
906
9.7
2,797
2,594
7.8
OPM
11.9
15.1
12.4
15.5
Interest
6.8
(2.7)
(350)
4.9
38
9.7
(34.5)
(128)
Depreciation
141
102
37.8
126
12.0
376
297
26.8
41
42
(2.6)
232
(82.4)
297
262
13.4
887
866
2.4
1,007
(11.9)
2,708
2,594
4.4
Other Income
PBT (excl. Extr. Items)
Extr. Income/(Expense)
12.3
27
117
(77.1)
(32)
(184.2)
(5)
117
PBT (incl. Extr. Items)
914
984
(7.1)
975
(6.2)
2,703
2,712
(0.3)
(% of sales)
10.9
16.1
12.0
16.2
Provision for Taxation
252
249
699
656
28
25
26
24
Reported PAT
662
735
(9.9)
737
(10.2)
2,004
2,056
(2.5)
Adjusted PAT
635
617
2.9
769
(17.4)
2,009
1,938
3.7
7.6
10.1
10.5
(27.5)
8.9
11.6
294.2
293.6
294.2
293.6
10.8
10.5
34.1
33.0
(% of PBT)
PATM
Equity capital (cr)
EPS (`)
13.2
1.2
238
6.0
24
294.0
2.7
13.1
(17.5)
6.5
3.5
Exhibit 2: Quarterly volume performance

Volume (units)
3QFY12
3QFY11
yoy chg (%)
2QFY12
qoq chg (%)
9MFY12
9MFY11 yoy chg (%)
Total volumes
190,743
153,833
24.0
178,848
6.7
531,714
423,713
25.5
Auto Sales - Domestic
117,402
90,205
30.2
114,215
2.8
327,897
255,967
28.1
Auto Sales - Exports

Total Auto Sales
Tractor Sales - Domestic
Tractor Sales - Exports
Total Tractor Sales
7,587
5,020
51.1
7,239
4.8
20,543
13,480
52.4
124,989
95,225
31.3
121,454
2.9
348,440
269,447
29.3
62,009
55,488
11.8
54,266
14.3
173,519
145,493
19.3
3,745
3,120
20.0
3,128
19.7
9,755
8,773
11.2
65,754
58,608
12.2
57,394
14.6
183,274
154,266
18.8
February 7, 2011
Robust net sales growth of 37% yoy, driven by volume growth: MM reported robust
top-line growth of 37% yoy (13.9% qoq) to `8,387cr, driven by impressive volume
growth of 24% yoy (6.7% qoq) and strong net average realization growth of 10.6%
yoy (6.9% qoq). Volume performance was aided by sustained momentum in the
automotive segment, which registered growth of 31.3% yoy (2.9% qoq). In the
passenger UV segment, MM posted strong 22.9% yoy growth, retaining its
dominant position with a market share of 57.8% (54% in 2QFY2012). The farm
equipment segment, on the other hand, witnessed moderate growth of 12.2% yoy,
with domestic tractor volumes registering growth of 11.8% yoy. However, MM
managed to improve upon its domestic market share, which increased to 42.9%
(41.2% in 2QFY2012) at the end of 3QFY2012.
32.5
24.5
100,000
29.9
22.2
20.8
22.6
40.0
24.0
30.0
20.0
50,000
10.0
(1.0)
4.0
2.0
0.0
(1.6)
(2.0)
(2.7)
3QFY10
6.0
5.9
3.6
2.3
(0.7)
3QFY12
2QFY12
1QFY12
4QFY11
3QFY11
2QFY11
1QFY11
4QFY10
3QFY10
0.0
8.0
6.2
(4.0)
3QFY12
50.0
150,000
2QFY12
47.4
(%)
12.0
10.6
10.0
1QFY12
60.0
yoy growth (RHS)
4QFY11
200,000
(`)
450,000
440,000
430,000
420,000
410,000
400,000
390,000
380,000
370,000
360,000
3QFY11
57.5
Net average realisation
(%)
70.0
2QFY11
yoy growth (RHS)
1QFY11
Total volume
(units)
250,000
Exhibit 4: Net average realization improves 10.6% yoy
4QFY10
Exhibit 3: Strong volume momentum continues
Exhibit 5: Segmental performance

Y/E March (` cr)
3QFY12
3QFY11
yoy chg (%)
2QFY12
qoq chg (%)
9MFY12
9MFY11
yoy chg (%)
Total Net Sales
8,392
6,131
36.9
7,368
13.9
22,501
16,742
34.4
Auto segment
5,116
3,472
47.4
4,518
13.3
13,492
9,675
39.4
Farm segment
3,251
2,638
23.2
2,826
15.1
8,939
6,997
27.7
25
21
18.6
25
1.0
70
69
0.7
Total PBIT
930
914
1.7
883
5.4
2,686
2,535
6.0
Auto segment
418
427
(2.0)
448
(6.7)
1,280
1,299
(1.4)
Farm segment
508
487
4.4
433
17.5
1,398
1,233
13.4
73.6
116.4
Other segments
Other segments
3.6
0.6
2.1
PBIT/ Sales (%)
11.1
14.9
12.0
Auto segment
8.2
12.3
(412)
9.9
Farm segment
15.6
18.5
(283)
15.3
Other segments
14.5
2.9
8.5
7.8
3.6
11.9
15.1
(175)
9.5
13.4
(394)
33
15.6
17.6
(197)
11.1
5.2
February 7, 2011
Margin pressures continue, down 324bp yoy to 11.9%: MMs EBITDA margin
contracted by 324bp yoy (46bp qoq) to 11.9%, largely driven by increased
purchase of finished products (up 265% yoy and 75% qoq) from the
manufacturing subsidiary, MVML. As a result, total raw-material cost as a
percentage of sales increased by 515bp yoy (178bp qoq) to 74.3%. However,
continued cost-rationalization measures resulted in a 160bp yoy (110bp qoq)
decline in other expenditure. EBIT margin of the automotive and farm equipment
segments declined by 412bp yoy (175bp qoq) and 283bp yoy (up 33bp qoq) to
8.2% and 15.6%, respectively.
Including MVMLs operations, operating margin was relatively stable and
expanded by 50bp qoq to 13.4%.
800
600
50.0
500
40.0
400
15.9
15.0
16.5
15.1
12.7
13.3
12.3
11.9
10.0
3QFY12
2QFY12
1QFY12
4QFY11
3QFY11
2QFY11
1QFY11
4QFY10
3QFY10
0.0
(%)
16.0
10.8
10.1
10.9
8.9
14.0
9.0
12.0
10.0
7.6
10.0
8.0
300
6.0
200
4.0
100
2.0
0.0
3QFY12
14.9
9.4
3QFY10
20.0
Net profit margin (RHS)
14.0
700
60.0
30.0
Net profit
(` cr)
74.9
2QFY12
69.7
73.1
1QFY12
68.7
72.4
2QFY11
67.9
71.7
1QFY11
67.3
Raw material cost/sales
4QFY10
70.0
70.1
4QFY11
EBITDA margin
(%)
80.0
Exhibit 7: Adjusted net profit up by 2.9% yoy
3QFY11
Exhibit 6: RM cost pressure continues to impact margin
Reported net profit up by moderate 2.9% yoy: The companys net profit for the
quarter registered moderate 2.9% yoy (down 17.4% qoq) growth to `635cr,
primarily due to contraction in operating margin. Further, higher depreciation
expense (up 37.8% yoy and 12% qoq) and increased tax rate (28% in 3QFY2012
vs. 25% in 3QFY2011) negatively affected the companys bottom-line growth.
February 7, 2011
Exhibit 8: Quarterly performance (MM + MVML)

Y/E March (` cr)
3QFY12
3QFY11 yoy chg (%)
9MFY12
9MFY11 yoy chg (%)
Net sales
8,216
6,134
33.9
22,277
16,735
33.1
Total expenditure
7,113
5,165
37.7
19,228
14,063
36.7
Material cost
5,903
4,170
41.6
15,809
11,342
39.4
% of net sales
71.8
68.0
387
71.0
67.8
319
Employee expense
475
362
31.4
1,350
1,053
28.2
5.8
5.9
(11)
6.1
6.3
(23)
% of net sales
Other expenses
735
634
15.9
2,068
1,668
24.0
8.9
10.3
(139)
9.3
10.0
(68)
1,103
969
13.8
3,049
2,672
14.1
OPM (%)
13.4
15.8
(237)
13.7
16.0
(228)
Depreciation
164
119
38.5
443
340
30.3
EBIT
% of net sales
Operating profit
939
850
10.4
2,606
2,332
11.8
Interest
34
19
83.9
93
25
278.5
Other income
41
42
(1.7)
297
262
13.5
945
873
8.2
2,810
2,569
9.4
27
117
27
117
PBT
972
990
(1.9)
2,836
2,686
5.6
Tax expense
266
264
0.5
724
672
7.8
Tax rate
27.4
26.7
25.8
25.0
PAT
706
726
(2.8)
2,113
2,015
4.9
Adj. PAT
679
608
11.6
2,086
1,897
9.9
PBT
Exceptional items
February 7, 2011
Investment arguments
Strong growth in the auto segment to offset slowdown in the FES segment:
Outlook for tractor sales appears to be challenging given that the industry has
witnessed just 3-3.5% growth in the past three months and management has
guided for moderate growth of 6-8% in FY2013E. However, MMs automotive
volume growth continues to surprise positively, with 29.3 yoy growth witnessed
in YTD FY2012. Further, strong response to the recently launched XUV500,
continued momentum in the pick-up segment and likely launch of the new
Xylo should sustain automotive sales going ahead and somewhat offset weak
tractor demand.
New ventures firming up well: MMs new ventures in the CV space are firming
up well. New product launches such as GIO and Maxximo have received good
response. Further, launch of new products in the M&HCV space has positioned
the company in-line with other major domestic CV players such as Ashok
Leyland and Tata Motors. This is expected to substantially augment the
companys overall volume growth, supported by its well-known brand equity
and extensive sales network.
Investments constitute 71% of the balance sheet: MM also has majority stakes
in various listed companies in other sectors, including technology, property
and finance. The high-growth potential of MM's subsidiaries is expected to
unlock the actual value of the stock over the years. Listing of its subsidiaries
has been supporting the companys valuation in the recent past and may
continue to do so in the long term as well.
Outlook and valuation

We expect MMs automotive segment to be the key volume driver (expected to
register a 20.5% CAGR over FY2011-13E) going ahead, backed by the strength of
the passenger UV and four-wheeler pick-up portfolio. For FES, we have revised our
volume (10.7% CAGR over FY2011-13E) estimates downwards, in-line with
managements guidance. We have also cut our earnings for FY2012/13
by 6.8%/7% to reflect margin pressures on account of increasing contribution
from MVML.
Nevertheless, given the attractive valuations, we maintain our Buy rating, valuing
the stock on SOTP basis. Our revised SOTP target price works out to `795,
wherein its core business fetches `609/share and value of its investments works out
to `186/share.
February 7, 2011
Exhibit 9: SOTP valuation

No. of Shares
(cr)
CMP
(`)
Value
(` cr)
Mahindra Financial Services
5.4
690
3,727
Mahindra Lifespace Developers
1.5
310
477
Tech Mahindra
5.4
643
3,455
Mahindra Forgings
4.2
59
245
Mahindra Holidays and Resorts
7.0
300
2,100
Mahindra Ugine Steel
1.7
55
Key Subsidiary
Other Investments (at book value)
90
5,479
Total value (` cr)
15,574
Per share value of investments (30% discount)
186
MM's Core Business/share value (12x FY13E EPS)
609
MM's Target Price with investments (`)
795
Exhibit 10: Key assumptions

Y/E March (units)
Passenger Utility Vehicles (UV)
FY08
FY09
FY10
FY11
FY12E
FY13E
148,761
214,128
150,726
169,205
196,278
224,738
4-wheeler pick-up
76,387
105,588
152,047
179,415
LCV
10,398
9,792
9,829
11,077
12,739
14,267
Logan
25,891
5,332
5,332
10,009
18,016
20,719
Three wheelers
33,927
57,424
44,439
62,142
69,599
75,167
Exports
25,657
10,815
11,567
19,042
26,659
33,324
Total Automotive Sales
244,634
297,491
298,280
377,063
475,337
547,629
Domestic Tractor Sales
90,037
165,581
165,633
201,785
229,026
247,348
8,677
8,999
9,001
11,868
13,411
14,484
98,714
174,580
174,634
213,653
242,437
261,832
343,348
472,071
472,914
590,716
717,774
809,461
Exports Tractor Sales

Total Tractor Sales
Total Volume
Exhibit 11: Angel vs. consensus forecast

Angel estimates
Net sales (` cr)
EPS (`)
Consensus
Variation (%)
FY12E
FY13E
FY12E
FY13E
FY12E
FY13E
30,397
35,422
29,485
34,058
3.1
4.0
44.7
50.8
44.2
50.6
1.2
0.3
Source: Bloomberg, Angel Research
February 7, 2011
Exhibit 12: One-year forward P/E chart

(x)
30.0
Absolute P/E
Exhibit 13: Premium/Discount to Sensex P/E

Absolute premium
(%)
60.0
Five-yr average P/E
Five-yr average P/E
40.0
25.0
20.0
20.0
0.0
15.0
(20.0)
10.0
Source: Company, Bloomberg, Angel Research
Jan-12
May-11
Oct-10
Mar-10
Jul-09
Dec-08
Sep-07
May-08
Feb-07
Jul-06
Nov-05
Apr-05
Sep-04
Jun-03
Jan-04
Apr-02
Jan-12
May-11
Aug-10
Dec-09
Apr-09
Jul-08
Nov-07
Feb-07
Jun-06
Oct-05
Jan-05
May-04
Aug-03
(80.0)
Dec-02
0.0
Apr-02
(60.0)
Nov-02
(40.0)
5.0
Exhibit 14: Automobile Recommendation summary

Company
Reco.
Ashok Leyland
Buy
Bajaj Auto
CMP Tgt. price

(`)
(`)
Upside
(%)
P/E (x)
EV/EBITDA (x)
RoE (%)
FY11-13E EPS
FY12E
FY13E
FY12E
FY13E
FY12E
FY13E
CAGR (%)
26
32
24.3
11.7
9.4
6.3
5.2
14.2
15.9
7.3
Accumulate
1,636
1,755
7.3
14.9
14.0
10.0
8.7
55.0
44.7
11.0
Hero MotoCorp
Neutral
1,950
16.6
14.4
9.6
8.0
66.2
55.0
21.0
Maruti Suzuki
Neutral
1,245
26.0
15.6
17.1
9.4
9.6
14.4
1.1
MM
Buy
689
795
15.3
15.4
13.6
9.1
7.9
22.8
20.9
8.4
Tata Motors
Neutral
250
8.8
8.6
5.7
5.4
39.8
31.1
1.0
TVS Motor
Buy
50
66
32.8
9.3
8.3
4.8
3.9
23.2
22.0
17.6
February 7, 2011
Profit & Loss Statement

Y/E March (` cr)
Gross sales
Less: Excise duty
FY09
FY10
FY11
FY12E
FY13E
12,866 14,514
20,157
25,137
32,773
38,190
1,587
1,794
2,093
2,376
2,769
Net Sales
11,282 12,927
18,363
23,044
30,397
35,422
Total operating income
11,282 12,927
18,363
23,044
30,397
35,422
% chg
Total Expenditure
Net Raw Materials
1,585
14.6
42.1
25.5
31.9
16.5
10,187 12,035
14.5
15,647
20,038
26,766
31,228
7,726
9,274
12,346
16,263
21,825
25,362
Other Mfg costs
300
311
379
444
594
726
Personnel
862
1,018
1,190
1,438
1,915
2,249
Other
1,300
1,431
1,732
1,892
2,432
2,890
EBITDA
1,094
892
2,716
3,006
3,631
4,194
% chg
3.5
(18.5)
204.5
10.7
20.8
15.5
(% of Net Sales)
9.7
6.9
14.8
13.0
11.9
11.8
Depreciation & Amortization
239
292
371
414
521
611
EBIT
856
600
2,345
2,593
3,110
3,583
% chg
0.9
(29.8)
290.6
10.5
20.0
15.2
(% of Net Sales)
7.6
4.6
12.8
11.3
10.2
10.1
Interest & other Charges
88
134
157
71
81
72
639
601
658
998
666
730
Other Income
(% of PBT)
51.1
61.0
23.6
29.4
18.0
17.2
1,407
1,067
2,847
3,520
3,695
4,241
% chg
(0.8)
(24.1)
166.7
23.6
5.0
14.8
Extraordinary Expense/(Inc.)
(156)
(81)
(59)
(125)
1,251
986
2,788
3,394
3,695
4,241
Recurring PBT
PBT
Tax
303
200
759
858
950
1,124
(% of PBT)
24.3
20.3
27.2
25.3
25.7
26.5
PAT (reported)
1,103
868
2,088
2,662
2,745
3,117
ADJ. PAT
947
786
2,029
2,537
2,745
3,117
% chg
(2.8)
(17.0)
158.1
25.0
8.2
13.6
(% of Net Sales)
Basic EPS (`)
February 7, 2011
FY08
8.4
6.1
11.0
11.0
9.0
8.8
23.1
15.9
36.9
45.3
44.7
50.8
Fully Diluted EPS (`)
19.8
14.4
35.9
43.2
44.7
50.8
% chg
(3.3)
(27.2)
148.7
20.5
3.5
13.6
Balance Sheet
Y/E March (` cr)
FY08
FY09
FY10
FY11
FY12E
FY13E
283
294
307
307
SOURCES OF FUNDS
Equity Share Capital
239
273
Reserves & Surplus
4,111
4,989
7,544 10,020 13,476 15,690
Shareholders Funds
4,350
5,262
7,827 10,313 13,783 15,997
Total Loans
2,587
4,053
2,880
2,405
2,705
2,405
57
(18)
240
354
354
354
Deferred Tax Liability

Total Liabilities
6,994
9,297 10,947 13,073 16,842 18,757
3,656
4,894
5,276
6,228
7,895
9,396
Less: Acc. Depreciation
1,842
2,326
2,538
2,842
3,363
3,974
Net Block
1,814
2,568
2,739
3,386
4,533
5,422
546
647
964
986
1,026
1,127
APPLICATION OF FUNDS
Gross Block
Capital Work-in-Progress
Goodwill
Investments
4,215
5,786
6,398
9,325 11,790 12,755
Current Assets
3,644
5,081
6,047
6,143
7,953
8,815
Cash
861
1,574
1,743
615
919
984
Loans & Advances
694
1,402
1,856
2,480
3,040
3,542
Other
2,089
2,104
2,447
3,049
3,995
4,288
Current liabilities
3,240
4,798
5,200
6,768
8,460
9,362
404
283
847
(624)
(506)
(547)
14
13
Net Current Assets

Mis. Exp. not written off
Total Assets
6,994
9,297 10,947 13,073 16,842 18,757
Cash Flow Statement

Y/E March (` cr)
FY08
FY09
FY10
FY11
FY12E
FY13E
Profit before tax
1,251
986
2,788
3,394
3,695
4,241
Depreciation
239
292
371
414
521
611
Change in Working Capital
213
834
(394)
342
195
102
65
320
990
685
Other income
(639)
(601)
(658)
(998)
(666)
(730)
Direct taxes paid
(303)
(200)
(759)
(858)
826
1,631
2,337
2,980
(Inc.)/Dec. in Fixed Assets
(692) (1,338)
(700)
(Inc.)/Dec. in Investments
(1,978) (1,571)
Less: Others
Cash Flow from Operations
Other income
Cash Flow from Investing
Issue of Equity
601
(2,031) (2,308)
28
(973) (1,708) (1,601)
(612) (2,927) (2,464)

658
3,099
998
666
(965)
730
(653) (2,903) (3,507) (1,836)

719
1,006
1,613
1,466 (1,173)
Inc./(Dec.) in loans
951
(475)
300
(300)
Dividend Paid (Incl. Tax)
325
321
312
624
898
898
(157)
449
19
291
811
697
(784)
(383)
(394)
19
899
(306)
304
66
1,363
861
1,574
1,743
615
919
861
1,574
1,743
615
919
984
Others
Cash Flow from Financing
Inc./(Dec.) in Cash
Opening Cash balances
Closing Cash balances
February 7, 2011
639
(950) (1,124)
2,796
1,015 (1,198)
10
Key Ratios
Y/E March
FY08
FY09
FY10
FY11
FY12E
FY13E
Valuation Ratio (x)

P/E (on FDEPS)
34.8
47.8
19.2
16.0
15.4
13.6
P/CEPS
24.6
32.4
16.3
13.7
13.0
11.4
7.6
7.2
5.0
3.9
3.1
2.6
P/BV
Dividend yield (%)
0.9
0.7
1.4
1.7
1.8
1.8
EV/Sales
3.0
2.6
1.7
1.3
1.0
0.9
34.7
41.7
13.0
11.0
9.1
7.9
5.4
4.0
3.2
2.5
1.9
1.7
EPS (Basic)
23.1
15.9
36.9
45.3
44.7
50.8
EPS (fully diluted)
19.8
14.4
35.9
43.2
44.7
50.8
Cash EPS
28.1
21.3
42.4
50.2
53.2
60.7
5.9
5.1
9.7
12.0
12.5
12.5
90.7
96.3
138.1
175.4
224.3
260.4
EBIT margin
7.6
4.6
12.8
11.3
10.2
10.1
Tax retention ratio
0.8
0.8
0.7
0.7
0.7
0.7
Asset turnover (x)
2.3
1.9
2.2
2.1
2.1
2.1
13.0
6.9
20.2
17.9
16.3
15.6
EV/EBITDA
EV / Total Assets
Per Share Data (`)
DPS
Book Value
Dupont Analysis
ROIC (Post-tax)
Cost of Debt (Post Tax)
3.1
3.2
3.3
2.0
2.4
2.1
Leverage (x)
0.0
0.0
0.0
0.0
0.0
0.0
13.0
6.9
20.2
17.9
16.3
15.6
14.0
7.4
23.2
21.6
20.8
20.1
Operating ROE
Returns (%)
ROCE (Pre-tax)
Angel ROIC (Pre-tax)
11.0
6.3
18.7
15.8
14.5
14.8
ROE
24.0
16.4
31.0
28.0
22.8
20.9
3.3
3.0
3.6
4.0
4.3
4.1
Inventory / Sales (days)
32
30
22
23
23
23
Receivables (days)
28
29
23
21
21
20
Payables (days)
69
82
69
65
67
74
(11)
(25)
(22)
(17)
(16)
(15)
Net debt to equity
(0.6)
(0.6)
(0.7)
(0.7)
(0.7)
(0.7)
Net debt to EBITDA
(2.3)
(3.7)
(1.9)
(2.5)
(2.8)
(2.7)
9.8
4.5
15.0
36.6
38.3
49.7
Turnover ratios (x)

Asset Turnover
WC (ex-cash) (days)
Solvency ratios (x)
Interest Coverage
February 7, 2011
11
Research Team Tel: 022 - 39357800
E-mail: research@angelbroking.com
Website: www.angelbroking.com
DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
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sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
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responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
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nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
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connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.
Disclosure of Interest Statement

1. Analyst ownership of the stock
Mahindra and Mahindra

No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Returns):
February 7, 2011
Buy (> 15%)

Reduce (-5% to 15%)
Accumulate (5% to 15%)

Sell (< -15%)
Neutral (-5 to 5%)
12

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3QFY2012 Result Update | Automobile

Mahindra and Mahindra

Y/E March (` cr)

Mahindra and Mahindra (MM) reported mixed results for 3QFY2012.

52 Week High / Low

Avg. Daily Volume

Face Value (`)

Shareholding Pattern (%)

MF / Banks / Indian Fls

FII / NRIs / OCBs

Indian Public / Others

Source: Company, Angel Research

Please refer to important disclosures at the end of this report

Mahindra and Mahindra | 3QFY2012 Result Update

Exhibit 1: Quarterly performance (Standalone)

yoy chg (%)

qoq chg (%)

yoy chg (%)

PBT (incl. Extr. Items)

Provision for Taxation

Source: Company, Angel Research

Exhibit 2: Quarterly volume performance

yoy chg (%)

qoq chg (%)

9MFY11 yoy chg (%)

Auto Sales - Domestic

Auto Sales - Exports

Source: Company, Angel Research

Mahindra and Mahindra | 3QFY2012 Result Update

Source: Company, Angel Research

yoy growth (RHS)

Net average realisation

yoy growth (RHS)

Exhibit 4: Net average realization improves 10.6% yoy

Exhibit 3: Strong volume momentum continues

Source: Company, Angel Research

Exhibit 5: Segmental performance

yoy chg (%)

qoq chg (%)

yoy chg (%)

Total Net Sales

PBIT/ Sales (%)

Source: Company, Angel Research

Mahindra and Mahindra | 3QFY2012 Result Update

Source: Company, Angel Research

Net profit margin (RHS)

Raw material cost/sales

Exhibit 7: Adjusted net profit up by 2.9% yoy

Exhibit 6: RM cost pressure continues to impact margin

Source: Company, Angel Research

Mahindra and Mahindra | 3QFY2012 Result Update

Exhibit 8: Quarterly performance (MM + MVML)

3QFY11 yoy chg (%)

9MFY11 yoy chg (%)

Source: Company, Angel Research

Mahindra and Mahindra | 3QFY2012 Result Update

Outlook and valuation

Mahindra and Mahindra | 3QFY2012 Result Update

Exhibit 9: SOTP valuation