Mahindra N Mahindra, 1Q FY 2014

7/27/2019 Mahindra N Mahindra, 1Q FY 2014

1/14

Please refer to important disclosures at the end of this report 1

Y/E March (` cr) 1QFY14 1QFY13 % chg (yoy) 4QFY13 % chg (qoq)Net Sales 10,023 9,367 7.0 10,487 (4.4)EBITDA 1,287 1,109 16.0 1,270 1.4

EBITDA Margin (%) 12.8 11.8 100bp 12.1 74bp

Adj. PAT 938 726 29.3 799 17.4Source: Company, Angel Research

Mahindra and Mahindra (MM) reported a mixed performance for 1QFY2014.The operating performance was slightly lower than our expectations due tosequential decline of 3.7% in net average realization. However, the bottom-line at`938cr was ahead of our estimates of `850cr, driven by a sharp increase in otherincome aided by maiden dividend of `70cr from Mahindra Vehicle ManufacturersLtd (MVML). The overall results were driven by an impressive performance of thefarm equipment segment (FES) following strong growth in tractor volumes(up 25.2% yoy) even though the automotive segment (AS) posted muted results.We lower our volume assumptions for the AS due to downward revision in utilityvehicle (UV) volumes. We now expect UV volumes to decline 6% yoy in FY2014against a growth of 6% assumed earlier. The UV volumes of the company haveslowed down considerably over the past two months due to rising competition andslowdown in demand. Nevertheless, we maintain our tractor volume estimates(growth of 12% yoy in FY2014) and expect the momentum to continue goingahead driven by improved demand on the back of good monsoons. Due todownward revision in AS volumes our revenue and earnings estimates forFY2014/15 are revised downwards by 5.5%/5% and 7.6%/5.3% respectively. Weretain our positive view on MM given its diversified business which we believe willhelp the company to face the macroeconomic challenges better than itscompetitors. We maintain our Buy rating on the stock.Strong growth in FES offsets slowdown in AS: The top-line registered a 7% yoygrowth (down 4.4% qoq) to `10,023cr led by 6.4% yoy (down 0.7% qoq) growthin volumes and 0.6% yoy growth in net average realization. The volume growthwas driven by an extremely strong growth in tractor volumes on anticipation of anormal monsoon. AS volumes however, remained flat as UV sales witnessed asharp slowdown following an increase in excise duty and also due to increase incompetition. The EBITDA margin expanded 100bp yoy (74bp qoq) to 12.8%,marginally better than our expectation of 12.5%. This was on account of softeningof commodity prices, cost control measures, lower share of traded goodsfollowing decline in AS volumes and also due to greater share of tractors (37.7%

as against 25% yoy) in the product-mix.Outlook and valuation: At `871, MM is trading at 13x FY2015E earnings. Wemaintain our Buy rating on the stock with an SOTP based target price of `1,011.

Key financials (Standalone)Y/E March (` cr) FY2012 FY2013 FY2014E FY2015ENet Sales 31,847 40,441 42,318 48,067% chg 35.7 27.0 4.6 13.6

Net Profit 2,745 3,230 3,453 3,961% chg 7.7 17.7 6.9 14.7

EBITDA (%) 11.8 11.6 12.0 12.2

EPS (`) 46.6 54.7 58.5 67.1P/E (x) 18.7 15.9 14.9 13.0

P/BV (x) 4.2 3.5 3.0 2.5RoE (%) 24.5 24.1 21.6 21.1

RoCE (%) 21.2 22.3 20.3 20.4

EV/Sales (x) 1.3 1.0 0.9 0.8

EV/EBITDA (x) 11.7 8.7 7.9 6.6

Source: Company, Angel Research; Note: CMP as of August 13, 2013

BUYCMP `871

Target Price `1,011

Investment Period 12 Months

Stock Info

Sector

Bloomberg Code

Shareholding Pattern (%)

Promoters 25.4

MF / Banks / Indian Fls 21.8

FII / NRIs / OCBs 44.8

Indian Public / Others 8.0

Abs. (%) 3m 1yr 3yr

Sensex (2.4) 9.1 5.9

MM (9.0) 17.7 38.8

Automobile

Avg. Daily Volume

Market Cap (`cr)

Beta

52 Week High / Low

53,637

1.0

1,026/730

113,731

Net Debt (`cr) 184

5

19,230

MM@IN

Nifty

Reuters Code

5,699

MAHM.BO

Face Value (`)

BSE Sensex

Yaresh Kothari022-3935 7800 Ext: 6844

[email protected]

Mahindra and MahindraPerformance Highlights

1QFY2014 Result Update | Automobile

August 14, 2013


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Mahindra and Mahindra | 1QFY2014 Result Update

August 14, 2013 2

Exhibit 1:Quarterly financial performance (Standalone)Y/E March (` cr) 1QFY14 1QFY13 % chg (yoy) 4QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)Net Sales 10,023 9,367 7.0 10,487 (4.4) 40,441 31,847 27.0Consumption of RM 5,447 4,774 14.1 5,347 1.9 20,663 18,207 13.5(% of Sales) 54.3 51.0 51.0 51.1 57.2

Staff Costs 498 452 10.4 442 12.6 1,866 1,702 9.7

(% of Sales) 5.0 4.8 4.2 4.6 5.3

Purchases of TG 1,864 2,271 (17.9) 2,487 (25.0) 9,753 5,293 84

(% of Sales) 18.6 24.2 23.7 24.1 16.6

Other Expenses 925 762 21.5 940 (1.6) 3,450 2,881 19.7

(% of Sales) 9.2 8.1 9.0 8.5 9.0

Total Expenditure 8,735 8,258 5.8 9,217 (5.2) 35,732 28,083 27.2Operating Profit 1,287 1,109 16.0 1,270 1.4 4,709 3,764 25.1OPM (%) 12.8 11.8 12.1 11.6 11.8

Interest 49 46 7 51 (3) 191 163 17

Depreciation 181 155 16.7 199 (9.0) 711 576 23.4

Other Income 164 60 174.4 92 78.1 549 472 16.3

PBT (excl. Extr. Items) 1,222 968 26.2 1,112 9.9 4,356 3,498 24.6Extr. Income/(Expense) - - - 91 - 91 108 -

PBT (incl. Extr. Items) 1,222 968 26.2 1,203 1.6 4,447 3,606 23.3(% of Sales) 12.2 10.3 11.5 11.0 11.3

Provision for Taxation 284 243 16.9 314 (9.5) 1,094 727 50.5

(% of PBT) 23.2 25.1 26.1 24.6 20.2

Reported PAT 938 726 29.3 889 5.5 3,353 2,879 16.5Adj PAT 938 726 29.3 799 17.4 3,262 2,771 17.7

Adj. PATM 9.4 7.7 7.6 22.9 8.1 8.7

Equity capital (cr) 295.2 295.0 295.2 295.2 294.5

Adjusted EPS (`) 15.9 12.3 29.2 13.5 17.4 55.3 47.0 17.5Source: Company, Angel Research

Exhibit 2:1QFY2014 Actual vs Angel estimatesY/E March (` cr) Actual Estimates Variation (%)Net Sales 10,023 10,563 (5.1)EBITDA 1,287 1,325 (2.9)

EBITDA margin (%) 12.8 12.5 30bp

Adj. PAT 938 850 10.4Source: Company, Angel Research


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Exhibit 3:Quarterly volume performanceVolume (units) 1QFY14 1QFY13 % chg (yoy) 4QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)Total volumes 197,562 185,606 6.4 198,895 (0.7) 787,257 718,586 9.6Auto Sales - Domestic 118,214 118,184 0.0 141,465 (16.4) 530,919 453,987 16.9Auto Sales - Exports 4,771 7,841 (39.2) 7,766 (38.6) 32,456 29,177 11.2

Total Auto Sales 122,985 126,025 (2.4) 149,231 (17.6) 563,375 483,164 16.6Tractor Sales - Domestic 71,390 56,561 26.2 45,897 55.5 211,596 221,730 (4.6)

Tractor Sales - Exports 3,187 3,020 5.5 3,767 (15.4) 12,286 13,692 (10.3)

Total Tractor Sales 74,577 59,581 25.2 49,664 50.2 223,882 235,422 (4.9)Source: Company, Angel Research

Healthy growth in top-line: For 1QFY2014, MMs top-line registered a 7% yoygrowth (down 4.4% qoq) to `10,023cr, slightly lower than our expectations of

`10,563cr. The top-line performance was led by a 6.4% yoy (down 0.7% qoq)

growth in volumes and 0.6% yoy growth in net average realization. The volume

growth for the quarter was driven by an extremely strong growth in tractor volumes

(up 25.2% yoy) on anticipation of a normal monsoon and better prospects for

kharif crop. The AS volumes, however, remained flat as UV volumes witnessed a

sharp slowdown following an increase in excise duty and also due to increasing

competition in the segment. The net average realization witnessed a decline of

3.7% sequentially as average realization in the FES and AS declined by 9% and

2.5% qoq respectively. While tractor segment revenues posted a strong growth of

26.7% yoy (36.6% qoq); automotive segment revenues recorded a 2.5% yoy

decline (sharp fall of 19.6% qoq) during the quarter.

Exhibit 4:Revival in tractor volumes led to growth

Source: Company, Angel Research

Exhibit 5:Net average realization up marginally


162,1

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(%)(units) Total volume yoy growth (RHS)

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(%)(`) Net average realisation yoy growth ( RHS )


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Exhibit 6:Segmental performanceY/E March (` cr) 1QFY14 1QFY13 % chg (yoy) 4QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)Total Net Sales 10,027 9,374 7.0 10,497 (4.5) 40,468 31,880 26.9Auto segment 6,121 6,279 (2.5) 7,616 (19.6) 28,405 20,101 41.3Farm segment 3,900 3,078 26.7 2,854 36.6 11,990 11,690 2.6

Other segments 7 17 (56.2) 26 (71.6) 73 89 (18.9)

Total PBIT 1,222 1,039 17.6 1,211 0.9 4,472 3,699 20.9Auto segment 567 553 2.6 747 (24.0) 2,597 1,856 39.9

Farm segment 653 482 35.3 456 43.2 1,858 1,833 1.4

Other segments 2.4 4.0 (38.7) 8.7 (71.8) 17.2 10.9 57.8

PBIT/ Sales (%) 12.2 11.1 110bp 11.5 65bp 11.0 11.6 (55)bpAuto segment 9.3 8.8 46bp 9.8 (54)bp 9.1 9.2 (9)bp

Farm segment 16.7 15.7 107bp 16.0 76bp 15.5 15.7 (18)bp

Other segments 32.8 23.5 33.1 23.7 12.2


EBITDA margin continues to inch upwards: On the operating front, the EBITDAmargin expanded 100bp yoy (74bp qoq) to 12.8%, marginally better than our

expectation of 12.5%. The margin performance was led by softening of commodity

prices, cost control initiatives, lower share of traded goods following decline in

automotive volumes and also due to greater share of tractors (37.7% as against

25% yoy) in the product-mix. As a result, the operating profit grew 16% yoy

(1.4% qoq) to `1,287cr. The EBIT margins in the AS and FES improved 46bp and

107bp yoy to 9.3% and 16.7% respectively. The adjusted bottom-line nevertheless,

surged 29.3% yoy (17.4% qoq) to`

938cr, ahead of our expectations of`

850cr.The bottom-line benefited from higher other income at `164cr (against `60cr in

1QFY2013) aided by dividend income of `81cr from subsidiaries.

Exhibit 7:EBITDA margin expands to 12.8%


Exhibit 8:Net profit aided by dividend from MVML


13.3 12.0 12.2 10.3 11.8 11.4 11.2 12.1 12.8

72.9 73.7 75.376.7 75.2 76.1 76.9 74.7 72.9

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2QFY12

3QFY12

4QFY12

1QFY13

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1QFY14

(%) EBITDA margin Raw material cost/sales

605

737

662

766

726

902

836

799

938

9.010.0

7.9 8.2 7.7

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7.8 7.6

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(%)(`cr) Net profit Net profit margin (RHS)


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August 14, 2013 5

Exhibit 9:Quarterly financial performance (MM + MVML)Y/E March (` cr) 1QFY14 1QFY13 % chg (yoy) 4QFY13 % chg (qoq) FY2013 FY2012 % chg (yoy)Net sales 9,701 8,879 9.3 9,983 (2.8) 38,357 31,370 22.3Total expenditure 8,300 7,644 8.6 8,548 (2.9) 33,027 27,220 21.3Material cost 6,807 6,363 7.0 7,102 (4.2) 27,397 22,395 22.3

% of net sales 70.2 71.7 71.1 71.4 71.4

Employee expense 533 481 10.8 478 11.5 1,998 1,795 11.3

% of net sales 5.5 5.4 4.8 5.2 5.7

Other expenses 960 800 20.0 968 (0.8) 3,633 3,031 19.9

% of net sales 9.9 9.0 9.7 9.5 9.7

Operating profit 1,401 1,235 13.4 1,435 (2.4) 5,329 4,150 28.4OPM (%) 14.4 13.9 14.4 13.9 13.2

Depreciation 208 180 15.6 228 (8.7) 818 670 22.1

EBIT 1,193 1,055 13.1 1,207 (1.2) 4,512 3,481 29.6

Interest 76 71 6.3 78 (3.3) 296 287 3.1

Other income 97 66 46.9 102 (4.4) 570 484 17.6

PBT 1,214 1,050 15.7 1,230 (1.3) 4,785 3,678 30.1Exceptional items - - - 91 - 91 108 -

PBT after Exceptional item 1,214 1,050 15.7 1,321 (8.1) 4,875 3,786 28.8Tax expense 304 271 12.2 358 (15.0) 1,241 789 57.3

% of PBT 25.1 25.8 27.1 25.5 20.8

Reported PAT 910 778 16.9 963 (5.5) 3,634 2,997 21.3Adj. PAT 910 778 16.9 872 4.3 3,544 2,889 22.7


MM + MVML post a strong performance: For 1QFY2014, the combined top-lineof the two entities - MM and MVML - posted a growth of 9.3% yoy to `9,701cr

driven by a 6.4% yoy growth in volumes and 2.6% yoy growth in net average

realization. FES revenues registered a robust growth of 26.7% yoy aided by 25.2%

yoy growth in volumes. AS revenues though remained flat yoy as volumes declined

2.4% yoy during the quarter. The EBITDA margins stood at 14.4%, up 53bp yoy,

on account of a better product mix, softening of commodity prices and due to cost

control measures. Led by a strong operating performance, the operating profit

recorded a strong growth of 13.4% yoy to `1,401cr. The EBIT margins in the AS

and FES stood at 11.2% (flat yoy) and 16.7% (up 100bp yoy) respectively. Adjusted

net profit came in at `910cr, up 16.9% yoy (4.3% qoq) aided by 46.9% yoy

increase in other income. Other income benefitted due to the dividend income of

`81cr from subsidiaries. During the quarter, MVML paid a maiden dividend of

`70cr.


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August 14, 2013 6

Conference Call Key highlights

The Management has revised the FY2014 tractor industry volume guidanceupwards to 10-12% from 6-8% earlier.

According to the Management, tractor volume growth in states like Gujaratand Tamil Nadu is declining currently due to crop failures in the past two

years. However, it expects the growth in these states to revive in FY2014.

MMs market share in the tractor segment remained stable at 41.4% in1QFY2014.

MM is planning to launch a brand new tractor platform towards the end ofFY2014.

Powerol revenues declined 12% yoy in 1QFY2014 to `220cr due to goodmonsoon and better power availability.

The company has no new product launch lined up in the UV segment untilFY2016. However the company would be launching refreshes of the existing

models in FY2014 and FY2015.

Ssangyong Motor Company (Ssangyong) reported its first ever quarterly profitin 2QCY2013. It reported a profit of KRW8bn as against a loss of KRW21.5bn

in 2QCY2012. The performance improvement was on account of improving

volumes. The companys volumes grew strongly by 26% yoy leading to a

top-line growth of ~27% yoy. The Management expects the volume

momentum to continue in 2HCY2013 on account of new product launches

and has maintained the CY2013 volume guidance of 147,000 units.

The Management reiterated its capex guidance of `7,500cr and investmentguidance of `2,500cr for the next three years.

The company has announced a de-merger of its truck business from MahindraTrucks and Buses Ltd. (MTBL). Accordingly, the trucks business of MTBL

(erstwhile MNAL) will be transferred to MM (parent); however, the spare parts

business will continue to remain under MTBL. The Management expects

operational efficiencies post the merger. Furthermore, there would be some

tax benefits as well (around ~`230cr) as MTBL has accumulated losses of

`1,000cr and deferred tax assets of `70cr as of March 2013. The effectivedate of merger would be April 1, 2013 and will be effective post the High

Courts approval for the merger. MTBL registered a loss of `370cr in FY2013.

The Management indicated that the dealer inventory for UVs increased slightlydue to sudden fall in demand in May and June. The company undertook some

inventory correction in July 2013 and expects further correction to happen in

August 2013.

The working capital requirement for the AS was higher during the quarter dueto high inventory levels; however, for the FES, it remained under control.

The company has increased prices by 0.5% each in the AS and FES during thequarter.


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August 14, 2013 7

Investment arguments

Strong growth in FES to offset weakness in AS: The outlook for MM's UVsegment appears challenging in the near term given that the competition in

the segment is increasing and also due to the slowdown in demand. Further,

the increase in excise duty during the Union Budget 2013-14 is also impacting

the sales of the company. Additionally, absence of any new launches until

FY2016 will accentuate the challenges further. Though the company would be

launching refreshes of the existing variants in FY2014 and FY2015, we believe

that the competition is getting more aggressive and would continue to impact

MMs market share in the near term. We expect MMs UV volumes to register

a decline of 6% in FY2014 leading to a 2.3% decline in AS volumes.

On the other hand, tractor volumes, which declined by ~5% in FY2013, are

expected to witness a trend reversal in FY2014 (expected to grow by ~12%

yoy) driven by expectations of a normal monsoon and better prospects for the

kharif crop. We expect strong growth in tractor volumes to offset weakness in

the AS leading to an overall volume growth of ~2% in FY2014.

Investments constitute ~45% of total assets: MM has presence in varioussectors through majority stakes in various listed companies, ie in sectors like

technology, hospitality, real estate and finance. The high growth potential of

MM's subsidiaries has supported its valuation in the past and may continue to

do so in the long term as well. Investments constitute ~45% of MMs total

assets as of March 2013.

Outlook and valuation

We lower our volume assumptions for the AS due to downward revision in utility

vehicle (UV) volumes. We now expect the UV volumes to decline 6% yoy in FY2014

against a growth of 6% assumed earlier. The UV volumes of the company have

come down considerably over the past two months due to rising competition and

slowdown in demand. Nevertheless, we maintain our tractor volume estimates

(growth of 12% yoy in FY2014) and expect the momentum to continue going

ahead, driven by improved demand on the back of good monsoons. Due to

downward revision in AS volumes our revenue and earnings estimates for

FY2014/15 are revised downwards by 5.5%/5% and 7.6%/5.3% respectively.

Exhibit 10:Change in estimatesY/E March Earlier Estimates Revised Estimates % chg

FY2014E FY2015E FY2014E FY2015E FY2014E FY2015ENet Sales (` cr) 44,761 50,572 42,318 48,067 (5.5) (5.0)OPM (%) 11.9 11.9 12.0 12.2 10bp 39bp

EPS (`) 63.3 70.9 58.5 67.1 (7.6) (5.3)Source: Company, Angel Research

We retain our positive view on MM given its diversified business which we believe

will help the company to face the macroeconomic challenges better than itscompetitors. At `871, MM is trading at 13x FY2015E earnings. We maintain our

Buy rating on the stock. Our sum of the parts (SOTP) target price works out to


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August 14, 2013 8

`1,011, wherein the companys core business fetches `738/ share and the value

of its investments works out to `273/ share.

Exhibit 11:SOTP valuationKey Subsidiary No. of Shares(cr) CMP*(`) Value(` cr)Mahindra Financial Services 29.1 247 7,194

Mahindra Lifespace Developers 2.1 441 919

Tech Mahindra 6.1 1,329 8,064

Mahindra Forgings 4.9 59 290

Mahindra Holidays and Resorts 6.7 221 1,471

Mahindra Ugine Steel 1.6 85 140

Ssangyong Motors 10.0 8,990# 4,932

Total value (` cr) 23,010Per share value of investments (30% discount) 273MM's Core Business/share value (12x FY15E EPS) 738MM's Target Price with investments (`) 1,011

Source: Company, Angel Research; Note: *CMP for subsidiaries as of Aug 13, 2013; # CMP for

Ssangyong Motors in KRW

Exhibit 12:Key assumptionsY/E March (units) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015EPassenger Utility Vehicles (UV) 150,726 169,205 202,276 264,137 248,289 273,118

4-wheeler pick-up 76,387 105,588 152,691 174,233 182,945 201,239

LCV 9,829 11,077 13,823 11,902 11,188 12,530

Logan 5,332 10,009 17,839 15,137 17,408 20,019

Three wheelers 44,439 62,142 67,440 65,510 62,235 67,213

Exports 11,567 19,042 29,177 32,456 28,561 31,417

Total Automotive Sales 298,280 377,063 483,246 563,375 550,625 605,537Domestic Tractor Sales 165,633 201,785 221,730 211,596 236,988 270,166

Exports Tractor Sales 9,001 11,868 13,722 12,286 13,760 15,412

Total Tractor Sales 174,634 213,653 235,452 223,882 250,748 285,577Total Volume 472,914 590,716 718,698 787,257 801,372 891,114


Exhibit 13:Angel vs consensus forecastAngel estimates Consensus Variation (%)FY14E FY15E FY14E FY15E FY14E FY15E

Total op. income (` cr) 42,318 48,067 43,977 49,944 (3.8) (3.8)EPS (`) 58.5 67.1 60.6 68.8 (3.4) (2.5)

Source: Bloomberg, Angel Research


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August 14, 2013 9

Exhibit 14:One-year forward P/E chart


Exhibit 15:Premium/Discount to Sensex P/E


Exhibit 16:Automobile - Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%)

P/E (x) EV/EBITDA (x) RoE (%) FY13-15E EPSFY14E FY15E FY14E FY15E FY14E FY15E CAGR (%)

Ashok Leyland Buy 13 18 34.9 34.9 7.2 5.6 3.4 2.3 11.0 74.4

Bajaj Auto Accumulate 1,859 2,099 12.9 15.5 13.3 10.7 8.8 38.9 36.5 15.3

Hero MotoCorp Accumulate 1,942 2,048 5.5 17.5 13.3 9.0 7.8 40.1 42.1 17.5

Maruti Suzuki Buy 1,398 1,648 17.9 14.8 12.7 6.6 5.7 14.4 14.6 17.8

Mahindra &Mahindra Buy 871 1,011 16.1 14.9 13.0 7.9 6.6 21.6 21.1 10.8Tata Motors Buy 291 355 22.0 7.5 6.6 3.6 3.2 28.5 25.1 15.8

TVS Motor Accumulate 32 36 11.2 6.6 5.4 2.1 1.4 17.8 18.9 16.8


Company background

Mahindra and Mahindra, the flagship company of the Mahindra Group, is the

largest manufacturer of UVs and tractors in India with an ~48% and ~42% market

share in these segments, respectively. The company is also the second largest

player in the light commercial vehicle (LCV) space, with an ~33% market share.

MM is also the only company in India that is present across all the automotive

segments. MM has an installed capacity of 6lakh and 2.3lakh units/year in the

automotive and farm equipment segments respectively. In FY2011, MM acquireda 70% stake in Ssangyong Motor Co (SYMC), transforming itself into a global

UV player. Apart from the core auto business, the company has

subsidiaries/associates in various businesses such as IT, NBFC, auto ancillaries,

hospitality and infrastructure.

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3

(%) Absolute premium Five-yr average premium


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August 14, 2013 10

Profit and loss statement (Standalone)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015ETotal operating income 18,363 23,460 31,847 40,441 42,318 48,067% chg 42.1 27.8 35.7 27.0 4.6 13.6Total expenditure 15,647 20,006 28,083 35,732 37,240 42,184Net raw material costs 12,346 16,264 23,500 30,415 31,442 35,690

Other mfg costs 379 444 553 624 698 750

Employee expenses 1,190 1,432 1,702 1,866 2,116 2,427

Other 1,732 1,866 2,328 2,826 2,983 3,317

EBITDA 2,716 3,454 3,764 4,709 5,078 5,883% chg 204.5 27.2 9.0 25.1 7.8 15.9

(% of total op. income) 14.8 14.7 11.8 11.6 12.0 12.2

Depreciation & amortization 371 414 576 711 855 1,041

EBIT 2,345 3,040 3,188 3,998 4,223 4,842% chg 290.6 29.6 4.9 25.4 5.6 14.6


Interest and other charges 157 72 163 191 208 208

Other income 658 552 580 640 588 647

Recurring PBT 2,847 3,520 3,606 4,447 4,604 5,282% chg 166.7 23.6 2.5 23.3 3.5 14.7

Extraordinary income/ (exp.) (59) (113) (134) (123) - -

PBT 2,788 3,407 3,472 4,324 4,604 5,282Tax 759 858 727 1,094 1,151 1,320

(% of PBT) 27.2 25.2 20.9 25.3 25.0 25.0

PAT (reported) 2,088 2,662 2,879 3,353 3,453 3,961ADJ. PAT 2,029 2,550 2,745 3,230 3,453 3,961% chg 158.1 25.7 7.7 17.7 6.9 14.7


Basic EPS (`) 36.9 45.3 48.9 56.8 58.5 67.1Adj. EPS (`) 35.9 43.4 46.6 54.7 58.5 67.1% chg 148.7 21.1 7.3 17.4 6.9 14.7


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Balance sheet statement (Standalone)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015ESOURCES OF FUNDSEquity share capital 283 294 295 295 295 295Reserves & surplus 7,544 10,020 11,810 14,364 16,987 20,043

Shareholders Funds 7,827 10,313 12,105 14,659 17,283 20,339Total loans 2,880 2,321 3,174 3,227 3,477 3,477

Deferred tax liability 240 354 527 615 615 615

Other long term liabilities - 187 275 415 415 415

Long term provisions - 421 363 442 442 442

Total Liabilities 10,947 13,598 16,444 19,358 22,232 25,287APPLICATION OF FUNDSGross block 5,276 5,971 7,865 9,006 11,245 13,791

Less: Acc. depreciation 2,538 2,838 3,572 4,048 4,903 5,944

Net Block 2,739 3,133 4,293 4,958 6,343 7,847Capital work-in-progress 964 774 795 863 1,125 1,379

Investments 6,398 8,926 10,297 11,833 13,590 15,458Long term loans and adv. 1,868 1,477 2,087 2,087 2,087

Other noncurrent assets 117 36 30 30 30

Current assets 6,047 4,722 6,871 7,681 7,314 7,797Cash 1,743 615 1,188 1,781 1,086 550

Loans & advances 1,856 1,153 1,396 1,272 1,481 1,682

Other 2,447 2,955 4,287 4,628 4,747 5,565

Current liabilities 5,200 5,942 7,326 8,096 8,257 9,311

Net current assets 847 (1,220) (454) (414) (943) (1,514)Misc. exp. not written off - - - - - -

Total Assets 10,947 13,598 16,444 19,358 22,232 25,287


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Cash flow statement (Standalone)

Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015EProfit before tax 2,788 3,407 3,472 4,324 4,604 5,282

Depreciation 371 414 576 711 855 1,041Change in working capital (394) 938 (484) 156 (161) (35)

Others 990 (370) 479 689 - -

Other income (658) (552) (580) (640) (588) (647)

Direct taxes paid (759) (858) (727) (1,094) (1,151) (1,320)

Cash Flow from Operations 2,337 2,980 2,735 4,146 3,558 4,320(Inc.)/Dec. in fixed assets (700) (505) (1,915) (1,209) (2,500) (2,800)

(Inc.)/Dec. in investments (612) (2,528) (1,372) (1,536) (1,757) (1,868)

Other income 658 552 580 640 588 647

Cash Flow from Investing (653) (2,480) (2,707) (2,105) (3,669) (4,021)Issue of equity 719 1,006 24 28 - -

Inc./(Dec.) in loans (1,173) (559) 853 53 250 -

Dividend paid (Incl. Tax) 312 624 803 869 835 835

Others (1,373) (2,698) (1,135) (2,397) - -

Cash Flow from Financing (1,515) (1,628) 545 (1,447) (585) (835)Inc./(Dec.) in cash 169 (1,129) 574 593 (696) (536)

Opening Cash balances 1,574 1,743 615 1,188 1,781 1,086Closing Cash balances 1,743 615 1,188 1,781 1,086 550


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Key ratios

Y/E March FY2010 FY2011 FY2012 FY2013 FY2014E FY2015EValuation Ratio (x)P/E (on FDEPS) 24.3 20.1 18.7 15.9 14.9 13.0P/CEPS 20.5 17.3 15.4 13.0 11.9 10.3

P/BV 6.3 5.0 4.2 3.5 3.0 2.5

Dividend yield (%) 1.1 1.4 1.5 1.6 1.4 1.4

EV/Sales 2.3 1.7 1.3 1.0 0.9 0.8

EV/EBITDA 16.9 12.7 11.7 8.7 7.9 6.6

EV / Total Assets 4.2 3.2 2.6 2.1 1.8 1.5

Per Share Data (`)EPS (Basic) 36.9 45.3 48.9 56.8 58.5 67.1

EPS (fully diluted) 35.9 43.4 46.6 54.7 58.5 67.1

Cash EPS 42.4 50.5 56.4 66.8 73.0 84.7

DPS 9.7 12.0 13.0 13.5 12.5 12.5

Book Value 138.1 175.4 205.3 248.1 292.6 344.3

Dupont AnalysisEBIT margin 12.8 13.0 10.0 9.9 10.0 10.1

Tax retention ratio 0.7 0.7 0.8 0.7 0.7 0.8

Asset turnover (x) 2.2 2.1 2.3 2.5 2.2 2.1

ROIC (Post-tax) 20.2 20.5 17.9 18.2 16.4 15.8

Cost of Debt (Post Tax) 3.3 2.1 4.7 4.5 4.6 4.5

Leverage (x) (0.5) (0.6) (0.6) (0.6) (0.6) (0.6)

Operating ROE 10.9 9.4 9.4 9.4 9.0 9.2

Returns (%)ROCE (Pre-tax) 23.2 24.8 21.2 22.3 20.3 20.4

Angel ROIC (Pre-tax) 18.7 17.7 16.7 17.2 15.0 14.7

ROE 31.0 28.1 24.5 24.1 21.6 21.1

Turnover ratios (x)Asset Turnover (Gross Block) 3.6 4.2 4.6 4.8 4.2 3.8

Inventory / Sales (days) 22 22 23 22 22 22

Receivables (days) 23 20 18 19 19 19

Payables (days) 69 63 61 60 60 60

WC cycle (ex-cash) (days) (22) (21) (20) (17) (18) (16)

Solvency ratios (x)Net debt to equity (0.7) (0.7) (0.7) (0.7) (0.6) (0.6)

Net debt to EBITDA (1.9) (2.1) (2.2) (2.2) (2.2) (2.1)

Interest Coverage (EBIT / Int.) 15.0 41.9 19.6 20.9 20.3 23.3


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Disclosure of Interest Statement Mahindra and Mahindra

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Documents

Mahindra N Mahindra, 1Q FY 2014