M&M climbs 2% as Credit Suisse assigns 'outperform' to the stock

Shares of Mahindra & Mahindra (M&M) climbed almost 2 percent in morning trade on BSE and looked on course to break their losing run of the last three consecutive sessions on February 11.

Shares of the company saw some traction after the global brokerage firm Credit Suisse gave an 'outperform' call on the stock with a target price at Rs 740.

The brokerage, assessing the quarterly earnings of M&M, said the company's India auto segment fared better than expected while the farm equipment sector (FES) came in-line.

Impairment charge dragged consolidated auto performance of the company, Credit Suisse said, adding that the EBIT numbers beat the estimates on account of better than expected auto segment margin.

Credit Suisse is of the view that M&M's tractor segment performance was in-line both on revenue and margin.

M&M registered a massive 72.8 percent year-on-year (YoY) fall in Q3FY20 profit due to a one-time impairment provision.

The bottom line fell to Rs 380.19 crore for the quarter ended December 2019, from Rs 1,395.96 crore in same period last year, company said, adding excluding exceptional and one-off items, the profit stood at Rs 934 crore against Rs 877 crore, a growth of 7 percent YoY.

M&M said exceptional items in standalone financial results of Rs 600.56 crore for the quarter represented provision for impairment of certain investments.

Revenue from operations during the quarter fell 6 percent YoY to Rs 12,120.3 crore, with a 6.2 percent decline in automotive business and 7.7 percent fall in the farm equipment segment.

Shares of M&M traded 0.87 percent up at Rs 532.65 around 10:57 hours IST.

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