Fundamental Result Update

MM Q1 FY22 Result Update



  • M&M + MVML has reported a mixed set of numbers in Q1FY22. While good performance in the Net profit. Net profit grew by 1966.9% YoY/426.5% QoQ to INR 14,012 Mn during Q1FY22 against stood at INR 678 in Q1 FY21 led by 41.8% growth in Farm Equipment Sector (FES). The tractor industry witnessed strong demand growth by 39% during the quarter.
  • Net sales stood at INR 1,17,628 mn (110.4% YoY / -11.8% QoQ) in Q1 FY22 against Bloomberg estimate of INR 1,23,600 mn.
  • EBITDA was at INR 16,317 mn (184.7% YoY / -16.8% QoQ) against Bloomberg estimate of INR 16,930 mn. EBITDA margin of 13.9% (36bps YoY / -8bps QoQ) against Bloomberg estimate of 13.7%.
  • The total volumes (auto + tractors) grew by 93.9% YoY/-8.6% QoQ to 1,84,842 units. Total tractor volume grew by 52.2% YoY/-6.4% QoQ to 99,929 units. The Automotive Sector continued its strong booking pipeline and market share better than Q4 FY21. New launches on track with Bolero Neo and Supro Profit Truck launches.

 

 

Outlook and valuation

M&M has reported a mixed set of numbers in Q1FY22 and beat consensus estimates on the profit front. M&M’s automotive and tractor performance came on the better side. Total volumes were up by 93.9% YoY to 1,84,842  units. Going ahead, the Company’s strategy revolves around tighter capital allocation, focusing domestic farm machinery scale-up and Auto businesses through new launches and become future-ready for the emerging EV business.

We maintain our Accumulate rating with a SoTP-based target price of INR 863 valuing the core business at 12.5x FY23E earnings (Bloomberg Estimate).


Tags: FundamentalResult Update


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