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FUNDAMENTAL
ST CK

Federal Bank Ltd. others segment includes logistics, after-
market and investment.
Buy Target Price Rs 1586 Investment Rationale
Value Parameters M&M, September sales were up 16% YoY at
500520 53,663 units. Its tractor sales were up 49%
BSE Code M&M YoY at 45,563 units. With the move towards
NSE Symbol Rs 1254 developing all electric vehicles till 2030,
CMP (As on 03rd Oct, 2017) M&M launched first e-Rickshaw, named
Face Value Rs 5 e-Alfa. M&M is expected to improve on
52 Week High/Low 1141/1459 its sales with all new segments of EV’s. To
Market Cap (Rs cr) reduce the cost of batteries which accounts
EPS (TTM) 79,473 for 40-50% of vehicles cost. M&M is seeking
PE Ratio (x) 60.64 a JV with another company this will further
21.10 reduce the price of the vehicles and improve
on margins. M&M has called it quits in the
Shareholding Pattern % (June’ 17) mass market two-wheeler category, nine
years after it entered the segment, this move
Promotors Dlls FIIs Other will help reducing its losses as two-wheeler
was a loss making business.
Company Overview Outlook
Mahindra & Mahindra Limited operates in nine We expect strong bounce back in Q2FY18
segments. The automotive segment includes sales of onwards on account of expected demand
automobiles, spare parts and related services. Farm revival from rural India, Government’s
equipment segment includes sales of tractors, spare strong focus on rural economy, EV vehicles
parts and related services; information technology and favourable monsoon helping agri
(IT) services, which consists of services rendered for industry and rural UV sales. Though present
IT and telecom; financial services steel trading and product pipe line is lean, company plans
processing includes trading and processing of steel; strong product pipeline over FY18 and FY19.
infrastructure includes operating of commercial Economic revival with new launches would
complexes, project management and development; help company clock double digit growth
hospitality segment includes sale of timeshare; in FY18 and FY19. Our estimates for FY19
Systech segment includes automotive components Net standalone revenues to be Rs 54,898 cr,
and other related products and services, and its operating margins to be 12.7% and PAT to be
Rs 4,436 cr with the EPS of Rs 74.7.
4 ARIHANT CAPITAL ¡ OCTOBER 2017 Valuations
We value the core business at Rs 1195 per
share, based on 16(x) FY19E PE(x) based
on EPS of Rs 74.7. We have valued total
investments (listed and unlisted) at Rs 391
per share, with a holding company discount
of 30%. Our SOTP value for stock comes at
Rs 1,586 per share.