Buy Mahindra & Mahindra\, target price Rs 720: Motilal Oswal

Motilal Oswal has given buy rating to Mahindra & Mahindra with a target price of Rs 720. The share price moved up by 5.90 per cent from its previous close of Rs 600.60. The stock’s last traded price is Rs 636.05.

Mahindra & Mahindra Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 74647.50 Crore) operating in Auto sector.

Financials
For the quarter ended 31-03-2020, the company reported a Consolidated sales of Rs 20182.28 Crore, down 19.33 % from last quarter Sales of Rs 25019.86 Crore and down -25.69 % from last year same quarter Sales of Rs 27158.77 Crore. The Company reported net profit after tax of Rs -1822.56 Crore in latest quarter.

Investment Rationale
Despite MM's recent outperformance, valuations are still at a substantial discount to its 5-year average (which captures both pain points of deterioration in the UV market share and the subsidiaries' performances). Implied Core P/E for MM is 16.1x/12.9x FY21/FY22E EPS and 1.5x/1.3x Core P/BV; this implies 19% discount to the 5-year average P/E and 29% discount to the 5-year average P/B.

Promoter/FII Holdings
Promoters held 18.9 per cent stake in the company as of June 30, 2020, while FIIs held 41.1 per cent, DIIs 28.5 per cent and public and others 11.5 per cent.