Buy Mahindra & Mahindra, target price Rs 830: Motilal Oswal

Motilal Oswal has given a buy rating to Mahindra & Mahindra with a target price of Rs 830. The share price moved up by 2.21 per cent from its previous close of Rs 705.25. The stock’s last traded price is Rs 723.75.

Mahindra & Mahindra Ltd., incorporated in the year 1945, is a Large Cap company (having a market cap of Rs 88913.13 Crore) operating in Auto sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 23566.75 Crore, up 44.39 % from last quarter Sales of Rs 16321.34 Crore and down -1.54 % from last year same quarter Sales of Rs 23935.93 Crore.

Investment Rationale
MM’s valuations are still at a good discount to its five-year average (which captures both pain points of deterioration in the UV market share and subsidiaries' performance), despite reasonable progress on correction of capital allocation. Implied core P/E for MM is 13.5x/11.8x FY22E/FY23E EPS. It maintains Buy with a TP of INR830/share (Dec-22E SoTP), implying core P/E of ~15x at TP (v/s five-year average core P/E of ~15.9x and 10-year average of ~14.3x).

Promoter/FII Holdings
Promoters held 18.9 per cent stake in the company as of Sept 30, 2020, while FIIs held 41.1 per cent, DIIs 29.9 per cent and public and others 10.2 per cent.