21 October 2020
3QCY20 Results Update | Sector: Automobile
Mahindra CIE
Estimate changes
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
MACA IN
379
52 / 0.7
179 / 59
6/39/-11
42
CMP: INR137
TP: INR165 (+20%)
Buy
Below est.; Weak op. performance in both India and EU
Focus on new orders and restructuring to drive strong recovery
Mahindra CIE (MACA)’s adverse operating performance in 3QCY20 was
attributable to weaker revenue in India and restructuring cost in EU. While
it is focusing on new orders / exports in India, it is also cutting cost to
reduce breakeven points for the EU business.
We marginally cut our CY21E EPS to factor in lower revenue growth.
Maintain
Buy,
with TP of ~INR165 (13x Sep’22 consol EPS).
Financials & Valuations (INR b)
Y/E December
CY19 CY20E CY21E
Sales
79.1
60.8
75.2
EBITDA (%)
12.2
8.4
12.4
Adj. PAT
3.6
0.9
4.1
EPS (INR)
9.4
2.3
10.8
EPS Growth (%)
-33.2 -75.5 366.6
BV/Share (INR)
123
125
136
Ratio
RoE (%)
8.0
1.9
8.3
RoCE (%)
6.5
1.9
6.9
Payout (%)
0.0
0.0
0.0
Valuations
P/E (x)
14.6
59.5
12.7
P/BV (x)
1.1
1.1
1.0
Div. Yield (%)
0.0
0.0
0.0
FCF Yield (%)
11.6
-2.1
6.0
Shareholding pattern (%)
As On
Jun-20 Mar-20
Promoter
69.5
67.7
DII
5.3
21.6
FII
14.6
0.0
Others
10.6
10.7
FII Includes depository receipts
Operating deleverage and restructuring cost in EU impact performance
3QCY20 consol. revenue/EBITDA declined 9%/28% YoY, but PAT grew 4%.
For 9MCY20, revenue/EBITDA declined 34%/69% and posted net loss.
Consol EBITDA stood at ~INR1.5b (v/s est. INR2b), impacted by lower
revenues in India and restructuring cost in the EU business (INR270m).
Higher other income in the EU business on the sale of real estate in Jeco
boosted PAT to INR607m (+4% YoY).
India business performance was below estimates, with revenue declining
by ~6% YoY to ~INR8.6b (v/s est. ~INR9.3b). The India EBITDA margin stood
at 12.6% (v/s est. 12.7%).
EU revenues declined ~9% YoY to ~INR8.7b (v/s est. ~INR8.1b), with 22%
decline in EUR terms. EBITDA margins stood at 5.2% (v/s est. 10%),
impacted by INR270m restructuring cost in the German CV business.
For India, demand momentum is expected to continue in 4QCY20;
however, management is cautiously optimistic on demand post the festive
season. Average capacity utilization is at 90%.
The India business would grow faster than the market on the back of: 1)
exports growing from 12–13% of sales to 20% (to see benefit from 2HCY21)
and 2) increasing contribution from new orders to 25% of sales from 15%.
Post the restructuring, the EU business breakeven revenue stands at
INR5.5b/qtr. This would further reduce to INR5.3b/qtr after the completion
of the restructuring by 4QCY20.
Capacity utilization is at 90% in India, 80% in the EU (PV forging), and 65–
70% in the EU (CV forging). Metalcastello is at the bottom of the utilization
cycle.
Capex: India CY20 capex would be at ~INR2.5b (INR2b capex for 9MCY20)
toward growth in capacity expansion. CY21 could be higher if the company
wins additional business.
CIE increased its stake by purchasing from the market. Stake now stands at
60.18% (v/s 58.02% in 2QCY20 and 56.29% in 3QCY19).
Net consol debt stands at INR16.1b.
MACA’s growth story is on track, driven by its organic initiatives (new
products/customers) and M&A focus.
The stock trades at attractive valuations of 12.7x/10.3x CY21E/CY22E
consol. EPS. Maintain
Buy,
with TP of ~INR165 (13x Jun’22 consol EPS).
Highlights from management commentary
Jun-19
67.7
7.1
10.3
14.9
Valuation and view
Jinesh Gandhi – Research Analyst
(Jinesh@MotilalOswal.com)
Vipul Agrawal – Research Analyst
(Vipul.Agrawal@motilaloswal.com)
3 September
research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P
1
Motilal Oswal
2019
Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
Mahindra CIE
Quarterly performance (Consol.)
(INR m)
Y/E December
1Q
Net Sales
21,744
YoY Change (%)
8.9
EBITDA
2,825
Margins (%)
13.0
Depreciation
740
Interest
103
Other Income
148
PBT before EO expense
2,130
EO Exp/(Inc)
13
PBT after EO exp
2,117
Tax Rate (%)
28.0
Adj. PAT
1,532
YoY Change (%)
16.2
Margins (%)
7.0
Revenues
India
8,524
Growth (%)
3.0
EU
13,324
Growth (%)
13.2
PBIT Margins
India
11.6
EU
9.3
E: MOFSL Estimates; AEL merged w.e.f 2QCY19
(INR m)
CY20E
60,801
-23.1
5,118
8.4
3,148
638
732
2,064
0
2,064
40.8
1,223
-65.7
2.0
29,487
-17.9
31,305
-27.4
5.5
3.3
CY19
2Q
21,420
3.0
2,616
12.2
844
115
78
1,734
0
1,734
27.2
1,262
-9.1
5.9
9,684
11.5
11,735
-2.4
8.2
9.0
3Q
18,685
-5.7
2,092
11.2
789
198
42
1,147
-51
1,198
48.9
583
-56.1
3.1
9,134
5
9,561
-18
7.4
7.5
4Q
17,229
-12.8
2,143
12.4
788
106
63
1,312
84
1,228
88.7
186
-86.8
1.1
8,704
6.0
8,512
-26.8
6.7
8.7
1Q
16,627
-23.5
1,822
11.0
815
182
49
873
-1
874
28.3
626
-59.1
3.8
7,819
-8.3
8,807
-33.9
6.8
6.0
CY20
2Q
3Q
7,355 16,943
-65.7
-9.3
-963
1,508
-13.1
8.9
518
849
167
142
179
420
-1,468
937
2
0
-1,470
937
12.5
35.2
-1,286
607
-201.9
4.2
-17.5
3.6
2,650
-72.6
4,704
-59.9
-23.4
-14.5
8,560
-6
8,381
-12
7.5
5.3
4QE
19,876
15.4
2,750
13.8
966
146
84
1,722
0
1,722
26.0
1,275
584.1
6.4
10,458
20.1
9,413
10.6
9.8
7.9
CY19
79,078
-1.5
8,319
10.5
3,161
523
331
4,966
46
4,920
55.7
3,564
-33.2
4.5
35,934
7.2
43,132
-7.8
8.5
8.7
Key takeaways from earnings call
India business
Demand momentum is expected to continue in 4QCY20, and OEMs are confident
of demand for the next six months; however, management is cautiously optimistic
on demand post the festive season.
CY19 sales levels are expected to recover by CY21; however, peak sales of CY18
(peak of the Auto sector) are expected to recover by CY23.
MACA would grow faster than the market by: 1) growing exports from 12–13% to
20% (real benefit to be seen from 2HCY21 as it would take 12–18M to activate
orders), 2) increasing its business with existing OEMs, 3) acquiring new OEMs as
customers – such as Renault, Kia, etc., and 4) targeting Tier 1 suppliers for new
and incremental business. Moreover, the company is seeing some shift in the
business from EU operations to India. Management targets generating 25% of
sales from new orders (v/s 15% currently).
Average capacity utilization is at 90%, with different units ranging from 80–100%
(Magnets at 100%).
The China substitution may generate benefit of INR20–30m/month in Magnets
and Gears.
The India BEP is INR3.5b/qtr revenues.
The EU region is seeing a second wave of COVID-19 cases; however, this has not
impacted production at any plant.
A favorable currency exchange rate restricted EU sales decline to 12% in INR
terms (v/s 22% in EUR terms).
Europe business
21 October 2020
2
 Motilal Oswal Financial Services
Mahindra CIE
Demand outlook:
Passenger Vehicle Forgings and Gears (Italy) have a positive
outlook for the coming quarters, but Commercial Vehicle Forgings remains
challenged.
Metalcastello's key customer is Caterpillar, which is at the bottom end of the
cycle in the US. Expect the market to revive post the US election in Nov’20.
Restructuring:
MFE incurred restructuring cost of INR270m. This was partially offset by the
sale of real estate property in Jeco (INR162m profit).
Major restructuring has been completed, and some additional cost is
expected for fine-tuning in 4QCY20. Margins would normalize toward the last
month of the quarter.
Metalcastello’s restructuring activity has been completed and the business is
seeing good margins.
The MFE Germany CV business is seeing restructuring. Current volumes would
remain stable for the remainder of CY20.
The PV business does not need any restructuring.
Post the restructuring, the EU business has a BEP of INR5.5b/qtr revenue. This
would further reduce by INR200m/qtr.
Capacity utilization: PV Forgings: 80%, Germany (CV): 65–70%
The government grant was EUR4m in the EU in 2Q and <EUR1m in 3Q.
CIE took additional stake from the market to reach 60.18% (v/s 58.02% in 2QCY20
and 56.29% in 3QCY19).
Capex: India CY20 capex would be at ~INR2.5b (9MCY20 capex at INR2b) toward
growth in capacity expansion. CY21 could be higher if the company wins
additional business.
Net debt stands at INR16.1b, including a lease of INR2.5b as well as the impact of
a weak INR (INR1b). Pure debt increased ~INR1.2b in Dec’19 due to an increase in
working capital (India business debt: INR1b; EU is balance).
EV risk to business: 25% of revenues (20% India and ~30% EU) are exposed to
engine components. MFE Germany does not do engine forgings. In PV Forgings,
crankshafts (25–30% of business) would not be relevant. The CV Forgings business
would not be affected.
Exhibit 2: Trend in consol. EBITDA
Growth %
Consol EBITDA (INR m)
EBITDA margin %
8.9
13.0 13.6 12.8 13.0 13.0
12.2
11.2 12.4
11.0
Others
Exhibit 1: Trend in consol. revenues
Consol Revenue (INR b)
26.5 31.2 21.2
17.5
8.9
3.0
-5.7 -12.8
7.4
-23.5
-65.7
-9.3
20.0 20.8 19.8 19.8 21.7 21.4 18.7 17.2 16.6
16.9
-13.1
Source: Company, MOFSL
Source: Company, MOFSL
21 October 2020
3
 Motilal Oswal Financial Services
Mahindra CIE
Exhibit 3: Trend in India revenues
India Revenue (INR m)
26
Growth %
Exhibit 4: Trend in India PBIT margins
India PBIT (INR m)
10.6 11.0 10.7
10.0
11.6 8.2
-8
PBIT margin %
30
21
16
3
11
5
6
7.4
6.7
6.8
7.5
-6
875 957 934 821 993 794 678 581 528 -621 639
-73
-23.4
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5: Trend in EU revenues
27
30
EU Revenue (INR m)
26
19
13
Growth %
Exhibit 6: Trend in EU PBIT margin
EU PBIT (INR m)
8.9 10.1 8.5 10.2 9.3
-18
-12
-27
-34
-60
-14.5
9.0
7.5
PBIT margin %
8.7
6.0
5.3
-2
Source: Company, MOFSL
Source: Company, MOFSL
Valuation and view
With COVID-led slowdown easing out and EU restructuring costs ending in
4QCY20, margins would normalize to earlier levels:
MACA has been focused on
diversifying revenues in India and cutting cost in the India and EU businesses.
However, CY20 performance is severely impacted by the repercussions of COVID-
19 and one-time restructuring cost. Looking beyond CY20, we expect margin
expansion to be driven by: (a) improvement in the mix, (b) product-process
location optimization, and (c) operating leverage.
Strong, focused, and disciplined parent
:
CIE is a focused global player in Auto
Components, with diversified technologies and multi-location offerings. It has
demonstrated the ability of acquisitive profitable growth across geographies, at
the same time delivering value-accretive growth, adhering to strict financial
discipline. MACA is benefitting from CIE’s expertise in driving operational
improvement and is working toward achieving CIE’s financial objectives.
Set for growth after consolidation phase:
Over the last three years since
acquiring MACA, CIE embarked on restructuring and consolidating all operations
under MACA. With Phase 1 of consolidation largely complete, MACA is now
focused on growth in Phase 2. In the India business, it is targeting both organic
and inorganic growth. In the Europe business, it would invest selectively for
growth purposes. MACA is CIE's vehicle for expansion in Southeast Asia and
forging technology worldwide.
21 October 2020
4
 Motilal Oswal Financial Services
Mahindra CIE
Financial discipline key to M&A-led strategy:
M&A has been an integral tool for
MACA in achieving strategic objectives and growth. For MACA, M&A would be the
key driver: (a) to fill the gaps in the area of strategic technologies – aluminum and
plastics, (b) for access to key players in the India PV segment (Maruti, Hyundai,
etc.), and (c) to enter the ASEAN markets. CIE has displayed strict acquisition
discipline, with criteria of < 3x EV/EBITDA in three years, and targets minimum RoI
of ~20%.
Maintain Buy, with TP of INR165:
We cut our CY21E EPS by 2.9% to factor lower
revenue. Near-term macro challenges notwithstanding, MACA’s growth story is
on track, driven by its organic initiatives (new products/customers) and M&A
focus. More importantly, under CIE’s parentage, MACA has been able to improve
its efficiencies, cut costs, and improve profitability. The stock trades at attractive
valuations of 12.7x/10.3x CY21E/CY22E consol. EPS. We value MACA at 13x
Sep’22 EPS, at almost a ~50% discount to BHFC’s target multiple, due to the
difference in its competitive positioning and capital efficiencies. Maintain Buy,
with TP of ~INR165 (13x Sep’22 consol EPS).
Exhibit 7: Revised estimates
(INR M)
Net Sales
EBITDA
EBITDA margin %
Adj. PAT
EPS
Rev
60,801
5,118
8.4
1,223
3.2
CY20E
Old
61,156
5,370
8.8
1,110
2.9
Chg (%)
(0.6)
(4.7)
-40bp
10.2
10.2
Rev
75,192
9,313
12.4
4,074
10.8
CY21E
Old
76,579
9,470
12.4
4,197
11.1
Chg (%)
(1.8)
(1.7)
0bp
(2.9)
(2.9)
Source: MOFSL
Exhibit 8: P/E and P/B band
72
P/E (x)
Min (x)
Avg (x)
+1SD
57.5
48
30.4
24
15.3
0
19.1
17.4
0.0
2.0
41.6
4.0
2.4
1.5
0.6
1.0
3.3
Max (x)
-1SD
6.0
P/B (x)
Min (x)
Avg (x)
+1SD
4.4
Max (x)
-1SD
Source: MOFSL
Source: MOFSL
21 October 2020
5
 Motilal Oswal Financial Services
Mahindra CIE
MACA’s| Key operating indicators
Exhibit 9: Expect consol revenue to recover sharply in CY21E
Revenues (INR b)
20.8
3.2
-7.5
24.9
61
-23.1
39
CY15
(9M)
53
CY16
64
CY17
80
CY18
79
CY19
CY20E
75
CY21E
FY15
Growth (%)
23.7
Exhibit 10: EBITDA margin to recover in CY21E
EBITDA (INR b)
12.7
13.1
EBITDA Margins (%)
12.2
8.4
11
10
5
CY17
CY18
CY19 CY20E CY21E
Source: Company, MOFSL
12.4
-1.5
7.9
9.4
10.0
4
4
CY15
(9M)
5
CY16
8
9
Source: Company, MOFSL
Exhibit 11: Expect consol. EPS to recover sharply in CY21E
EPS
Growth (%)
233.1
Exhibit 12: Debt under control despite organic & inorganic
initiatives
Net Debt (INR b)
0.5
Net Debt:Equity (x)
111.2
38.2
28.4
4.6
CY16
9.8
CY17
44.7
-33.2
3.6
CY15
(9M)
14.1
CY18
9.4
CY19
CY20E
3.2
-65.7
10.8
CY21E
9.7
CY15
(9M)
0.4
0.3
0.2
12.3
CY16
10.7
CY17
8.2
CY18
12.2
CY19
13.2
CY20E
0.3
0.3
0.2
10.3
CY21E
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 13: RoEs to remain stable despite AEL acquisition
RoE (%)
Exhibit 14: FCF positive throughout, except CY19, due to AEL
acquisition
CFO
Capex
FCF
10.3
13.3
10.6
7.7
7.0
6.6
6.8
4.8
3.0
8.2
2.6
-2.0
CY15
(9M)
5.1
0.9
-2.2
7.1
6.0
2.9
2.0
-3.1
3.0
7.6
3.1
-1.1
8.0
-4.1
CY18
-4.2
CY19
-4.0
CY20E
-4.5
CY21E
FY15
CY15
(9M)
CY16
CY17
CY18
CY19 CY20E CY21E
Source: Company, MOFSL
CY16
CY17
Source: Company, MOFSL
21 October 2020
6
 Motilal Oswal Financial Services
Mahindra CIE
Exhibit 15: Key operating metrics
INR m
Revenues
Forgings
Growth (%)
India (ex BFL)
Growth (%)
BFL
Growth (%)
MFE Europe
Growth (%)
CIE Europe
Growth (%)
Gears
Growth (%)
India
Growth (%)
Metalcastello
Growth (%)
Stampings
Growth (%)
Castings
Growth (%)
Composites
Growth (%)
Magnets
Growth (%)
Aluminum (AEL)
Growth (%)
Total Consol Revenues
Growth (%)
EBITDA Margins
EBIT Margins
Adj. EPS (INR/Sh)
Growth (%)
CY16
36,436
3,868
1,750
16,009
14,809
5,106
1,469
3,637
6,342
3,652
880
1,338
CY17
45,474
25
4,364
13
6,917
295
17,316
8
16,876
14
4,716
-8
828
-44
3,888
7
8,015
26
4,177
14
907
3
1,292
-3
CY18
56,132
23
5,971
37
8,210
19
21,095
22
20,857
24
7,642
62
2,071
150
5,571
43
9,149
14
5,422
30
1,017
12
1,355
5
CY19
51,519
-8
11,921
100
1,950
-76
16,604
-21
21,044
1
7,677
0
2,196
6
5,482
-2
8,410
-8
4,237
-22
1,069
5
1,068
-21
5,818
79,078
-2
12.2
8.2
9.4
-33
CY20E
37,587
-27
8,702
-27
950
-51
12,320
-26
15,615
-26
5,698
-26
2,327
6
3,370
-39
6,308
-25
3,178
-25
780
-27
908
-15
6,981
20
60,801
-23
8.4
3.2
3.2
-66
CY21E
46,937
25
10,269
18
1,220
28
16,336
33
19,112
22
4,641
-19
0
-100
4,641
38
7,443
18
3,813
20
952
22
1,108
22
8,236
18
75,192
24
12.4
7.8
10.8
233
53,199
10.0
5.6
4.6
64,279
21
12.7
8.5
9.8
111
80,315
25
13.1
9.5
14.1
45
21 October 2020
7
 Motilal Oswal Financial Services
Mahindra CIE
Financials and valuations
Consolidated – Income Statement
Y/E December
Total Income from Operations
Change (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Minority Interest
Reported PAT
Adj. PAT
Change (%)
Margin (%)
Consolidated – Balance Sheet
Y/E December
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Other Current Liabilities
Provisions
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
CY15 (9M)
38,653
-30.6
35,022
90.6
3,632
9.4
1,630
2,002
504
287
1,785
-779
1,006
239
23.7
0
767
1,361
38.2
3.5
CY16
53,199
37.6
47,888
90.0
5,311
10.0
2,325
2,985
594
314
2,706
-90
2,615
926
35.4
0
1,689
1,747
28.4
3.3
CY17
64,279
20.8
56,136
87.3
8,143
12.7
2,683
5,460
510
268
5,217
-151
5,067
1,483
29.3
0
3,584
3,691
111.2
5.7
CY18
80,315
24.9
69,805
86.9
10,511
13.1
2,867
7,643
502
387
7,529
-504
7,025
2,043
29.1
0
4,981
5,339
44.7
6.6
CY19
79,078
-1.5
69,401
87.8
9,677
12.2
3,161
6,516
523
331
6,324
-46
6,279
2,741
43.7
0
3,538
3,564
-33.2
4.5
CY20E
60,801
-23.1
55,683
91.6
5,118
8.4
3,148
1,970
638
732
2,064
0
2,064
841
40.8
0
1,223
1,223
-65.7
2.0
(INR m)
CY21E
75,192
23.7
65,878
87.6
9,313
12.4
3,433
5,880
590
393
5,682
0
5,682
1,608
28.3
0
4,074
4,074
233.1
5.4
(INR m)
CY21E
3,790
47,845
51,635
0
14,691
912
67,238
50,978
24,201
26,777
35,260
1,000
955
26,162
10,468
7,004
3,426
5,263
22,916
14,439
4,511
3,965
3,246
67,238
CY15 (9M)
3,233
16,833
20,066
0
10,847
-1,429
29,484
16,500
2,935
13,565
19,364
559
671
15,844
7,189
3,831
502
4,323
20,520
14,063
3,299
3,158
-4,675
29,484
CY16
3,781
28,882
32,663
0
13,621
-1,710
44,575
22,912
5,077
17,835
27,338
967
389
20,109
8,352
5,219
981
5,557
22,063
15,258
3,316
3,489
-1,953
44,575
CY17
3,784
33,372
37,156
0
11,969
-1,629
47,496
28,418
9,279
19,139
28,364
602
550
24,705
9,898
5,984
719
8,103
25,865
15,743
6,477
3,644
-1,160
47,496
CY18
3,788
39,103
42,891
0
16,134
-1,565
57,460
32,235
12,294
19,941
29,111
960
6,808
26,455
12,286
7,414
1,127
5,628
25,815
16,838
5,038
3,939
640
57,460
CY19
3,790
42,548
46,338
0
14,691
912
61,941
42,936
17,619
25,316
35,260
542
955
23,553
10,566
7,368
1,499
4,120
23,686
14,771
4,745
4,170
-133
61,941
CY20E
3,790
43,771
47,561
0
14,691
912
63,164
46,478
20,767
25,710
35,260
1,000
955
19,298
8,848
5,664
530
4,256
19,059
12,205
3,648
3,206
239
63,164
21 October 2020
8
 Motilal Oswal Financial Services
Mahindra CIE
Financials and valuations
Ratios
Y/E December
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE (Post-tax)
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Net Debt/Equity
Consolidated – Cash Flow Statement
Y/E December
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Issue of Shares
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
CY15 (9M)
3.6
7.9
53.1
0.0
0.0
38.1
17.4
2.6
1.6
17.1
0.0
12.7
7.0
5.5
5.2
2.3
1.3
68
36
133
0.5
CY16
4.6
10.8
86.4
0.0
0.0
29.7
12.7
1.6
1.2
12.2
0.0
2.3
6.6
5.8
5.5
2.3
1.2
57
36
105
0.4
CY17
9.8
16.9
98.3
0.0
0.0
14.1
8.1
1.4
1.0
7.8
0.0
5.3
10.6
8.8
8.8
2.3
1.4
56
34
89
0.3
CY18
14.1
21.7
113.4
0.0
0.0
9.7
6.3
1.2
0.8
6.4
0.0
7.9
13.3
10.9
11.5
2.5
1.4
56
34
77
0.2
CY19
9.4
17.8
122.6
0.0
0.0
14.6
7.7
1.1
0.8
6.7
0.0
16.0
8.0
6.5
6.8
1.8
1.3
49
34
68
0.3
CY20E
3.2
11.6
125.8
0.0
0.0
42.4
11.9
1.1
1.1
12.9
0.0
-2.8
2.6
2.6
2.0
1.3
1.0
53
34
73
0.3
CY21E
10.8
19.9
136.6
0.0
0.0
12.7
6.9
1.0
0.8
6.8
0.0
8.2
8.2
6.9
6.9
1.5
1.1
51
34
70
0.2
(INR m)
CY21E
5,682
3,433
198
-1,608
-111
7,594
0
7,594
-4,500
3,094
0
393
-4,107
0
0
-590
0
0
-590
2,896
620
3,517
CY15 (9M)
1,006
1,630
504
-261
3,857
6,736
60
6,796
-2,006
4,790
-295
49
-2,252
28
-4,627
-337
0
0
-4,936
-391
893
502
CY16
2,616
2,325
594
-593
-1,881
3,060
-21
3,040
-2,158
882
284
-6,434
-8,308
4,525
1,817
-594
0
0
5,748
480
502
981
CY17
5,067
2,734
545
-1,077
-2,193
5,076
46
5,122
-3,105
2,017
-183
260
-3,028
66
-1,877
-545
0
0
-2,356
-262
981
719
CY18
7,025
2,898
525
-1,444
-1,769
7,235
-155
7,080
-4,101
2,979
-6,201
129
-10,173
57
4,089
-525
0
0
3,621
528
719
1,247
CY19
6,279
3,168
525
-1,161
1,556
10,367
-94
10,273
-4,238
6,035
-1,871
219
-5,890
30
-3,545
-525
0
0
-4,040
343
1,247
1,590
CY20E
2,064
3,148
-95
-841
-1,341
2,936
0
2,936
-4,000
-1,064
0
732
-3,268
0
0
-638
0
0
-638
-970
1,590
620
21 October 2020
9
 Motilal Oswal Financial Services
Mahindra CIE
NOTES
21 October 2020
10
 Motilal Oswal Financial Services
Mahindra CIE
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products.
MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading
Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity &
Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository
Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &
Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the website
at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy
or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though
there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should
be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant
banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from
MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong
Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to
which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities,
products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong
Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"
and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and
investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution
only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors").
This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only
available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S.
Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct
business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International
Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in
respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of
which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform
MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
21 October 2020
11
 Motilal Oswal Financial Services
Mahindra CIE
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may
not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of
MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature.
The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed,
in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose
and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes
investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and
opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions
and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such
investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks
involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all
investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not
suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this
document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views
expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as
may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or have effected an own account
transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit
investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient
should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or
developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document
is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or
in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country
or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing
requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose
possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives
shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of
the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from
such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or
employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West),
Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412.
AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC):
PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML):
PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds,
PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of
MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by
proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns.
Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID:
na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
21 October 2020
12