22 July 2020
2QCY20 Results Update | Sector: Automobile
Mahindra CIE
Estimate changes
TP change
Rating change
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CMP: INR110
TP: INR141 (+28%)
Buy
Above est.; Sharp reduction in other expenses drives EBITDA beat
New opportunities emerge on import substitution
MACA’s 2QCY20 operating performance came in better than est. owing to a
sharp reduction in other expenses. While it is leveraging opportunities on
import substitution, it is also cutting cost to reduce breakeven points.
We upgrade our CY21E EPS by 2.5% (CY20 LTP) to factor lower other
expenses, lower depreciation, and Fx loss reversal. Maintain
Buy,
with TP of
~INR141 (13x Jun’22 consol EPS).
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
41.7 / 0.6
203 / 59
-13/-27/-43
40
Lower other expenses drive beat despite restructuring cost in EU
Financials & Valuations (INR b)
Y/E December
CY19 CY20E CY21E
Sales
79.1
59.9
74.1
EBITDA (%)
12.2
8.2
12.0
Adj. PAT
3.6
0.7
3.7
EPS (INR)
9.4
1.9
9.7
EPS Growth (%)
-33.2 -80.3 419.9
BV/Share (Rs)
123
124
134
Ratio
RoE (%)
8.0
1.5
7.5
RoCE (%)
6.5
1.7
6.4
Payout (%)
0.0
0.0
0.0
Valuations
P/E (x)
11.7
59.2
11.4
P/BV (x)
0.9
0.9
0.8
Div. Yield (%)
0.0
0.0
0.0
FCF Yield (%)
-5.4
-2.8
6.8
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
2QCY20 consol revenues declined ~65.7% to ~INR7.35b (est.: ~INR6.8b).
EBITDA loss stood at ~INR963m (v/s est. loss of INR1.7b), lower than
estimated, on account of a sharp reduction in other expenses (~50% QoQ).
Furthermore, a change in the depreciation policy to the unit-of-production
method (from the straight-line method) resulted in lower depreciation by
INR357m. As a result, reported loss was restricted to ~INR1.29b (v/s est.
loss of ~INR1.8b).
The India business
saw revenue decline of ~72% YoY to ~INR2.65b (in-line).
EBITDA loss stood at INR474m (v/s est. loss of INR855m), lower than
estimated, driven by lower other expenses and lower depreciation.
The EU business
saw revenue decline of ~60% YoY to ~INR4.7b (v/s est. of
INR4.1b). EBITDA loss stood at INR491m (v/s est. loss of INR821m).
In the India business, sales for April and May dropped below breakeven;
June saw positive EBIT. Current capacity utilization is at ~50% and is
expected to reach 65–70% in 3QCY20.
India’s employee headcount has been reduced, and the benefit would
reflect in the coming quarters (10% permanent reduction).
It is seeing the emergence of import substitution opportunity in India and
has already acquired similar business in the Gears and Magnets division.
Also, it expects consolidation in the vendor base in both India and the EU, a
benefit for MACA.
It has reduced its breakeven level by 10% to revenues of INR9b/quarter by
reducing fixed cost by ~INR100m/month. This, coupled with on-going
restructuring at MFE and Metalcastello, should help profitability normalize
to pre-COVID-19 levels by the end of CY20.
BF Mexico changed its functional currency to USD (effective from 1
st
Jan
2020), resulting in the reversal of Fx loss of ~INR418m reported in 1QCY20.
EU is nearing normalcy as June was EBITDA positive (excl. cost of restructuring).
Utilization would inch up to 65–70% in 3QCY20 (55–60% in June).
The parent is open to increasing its stake through a creeping acquisition if
market price is conducive.
The stock trades at attractive valuations of 11.4x CY21E consol. EPS and 0.8x
CY21 P/B. Maintain
Buy,
with TP of ~INR141 (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); +91 22 6129 1524
Vipul Agrawal – Research Analyst
(Vipul.Agrawal@motilaloswal.com); +91 22 7193 4322
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)
CY19
Y/E December
1Q
2Q
3Q
Net Sales
21,744 21,420 18,685
YoY Change (%)
8.9
3.0
-5.7
EBITDA
2,825 2,616 2,092
Margins (%)
13.0
12.2
11.2
Depreciation
740
844
789
Interest
103
115
198
Other Income
148
78
42
PBT before EO expense
2,130 1,734 1,147
EO Exp/(Inc)
13
0
-51
PBT after EO exp
2,117 1,734 1,198
Tax Rate (%)
28.0
27.2
48.9
Adj. PAT
1,532 1,262
583
YoY Change (%)
16.2
-9.1
-56.1
Margins (%)
7.0
5.9
3.1
Revenues
India
8,524 9,684 9,134
Growth (%)
3.0
11
4.9
EU
13,324 11,735 9,561
Growth (%)
13.2
-2
-17.7
PBIT Margins
India
11.6
8.2
7.4
EU
9.3
9.0
7.5
E: MOFSL Estimates; AEL merged w.e.f 2QCY19
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
CY20
1Q
2Q
3QE
16,627 7,355 16,369
-23.5 -65.7 -12.4
1,822 -963 1,746
11.0
-13.1
10.7
815
518
825
182
167
160
49
179
75
873 -1,468 836
-1
2
0
874 -1,470 836
28.3
12.5
33.0
626 -1,286 560
-59.1 -201.9 -4.0
3.8
-17.5
3.4
7,819
-8.3
8,807
-33.9
6.8
6.0
2,650
-73
4,704
-60
-23.4
-14.5
7,764
-15.0
8,605
-10.0
6.3
5.9
CY19
4QE
19,548
13.5
2,313
11.8
986
181
59
1,205
0
1,205
33.5
801
330.0
4.1
9,654
10.9
9,887
16.2
6.7
6.5
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
CY20E
59,899
-24.3
4,918
8.2
3,144
690
362
1,446
1
1,445
51.5
703
-80.3
1.2
27,887
-22.4
32,003
-25.8
3.9
3.1
(INR m)
CY20E
2QE
6,819
-68.2
-1,676
-24.6
825
200
60
-2,641
0
-2,641
31.4
-1,812
-243.5
-26.6
2,712
-72.0
4,107
-65.0
-46.5
-28.8
Key takeaways from earnings call
Sales decline across businesses is below the breakeven point due to the COVID-19
impact.
BF Mexico changed its functional currency to USD with effect from 1
st
January
2020. The business has generated a restatement of its 1Q figures, with gains of
INR418m in exchange rate fluctuations.
April and May were heavily affected by the lockdown, so negative EBITDA was
generated mainly during this period. However, June was already reporting
positive EBIT.
AEL received INR122m as grant income in 2QCY20, with 90–95% from the prior
period. The total grant would be INR36m for CY20, of which INR18–20m came in
1H. The total accrual to date is ~INR1b.
Although employee headcount has reduced, the benefit would reflect in the
coming quarters.
BF Mexico has seen fresh business from new customers; exports are doing well in
Bill Forge and Gears.
Cap. utilization increased to 65–70% in 3QCY20 from 50% in June.
India business
Europe business
The Europe business is nearing normalcy, with June already coming in EBITDA
positive (excluding restructuring costs).
Restructuring actions have already been undertaken, and EBITDA includes about
~INR344m of restructuring cost (in MFE and Metalcastello). This is for lay-offs,
22 July 2020
2
 Motilal Oswal Financial Services
Mahindra CIE
although the execution of the layoffs would happen in the next few months. This
would result in an EUR4m reduction in staff cost on an annualized basis.
Capacity utilization increased to 65–70% in 3QCY20 v/s 55–60% in June.
Incentives in EU – It received an EUR4m benefit under the schemes during
2QCY20. The benefit was largely for April and May as it was ramping up
production in June.
Outlook: For PVs, 75–80% of CY19 volumes in the next two to three quarters;
CY21 expected to be 10% below 2019 levels
Others
Net financial debt increased to ~INR14.5b in Jun’20 from ~INR11.5b in Mar’20 due
to forex fluctuation impact of INR840m and IndAS16 impact of ~INR2.5b.
The company reduced its breakeven level by 10% to INR9b revenue from INR10b
revenue/quarter. Fixed cost reduced by INR 100m/month on fixed cost of
INR1000m/month earlier.
The next quarter should see improvement in margins, and expect pre-COVID-19
margins by the end of the year.
Tactics to improve profitability:
Short term (3–6 months) – Cost reductions, profitability, improvements, and
restructuring at Metalcastello and MFE
Medium term (6–12 Months) – OEE improvement, labor productivity
improvement, VAVE, and Bought Out Parts (BOP) insourcing
Long term (12 months and beyond) – OEE improvement, value stream
mapping, TPM/5S
It is seeing the emergence of import substitution opportunity in India and has
already acquired similar business in the Gears and Magnets division. Also, it
expects consolidation in the vendor base in both India and the EU, a benefit for
MACA.
Capex for CY20 at consol level would be ~INR2.4b (INR1.4 b invested in 1H).
CIE open to increase its stake through a creeping acquisition if market price is
conducive.
Exhibit 1: Trend in consol. revenues
Consol Revenue (INR b)
31.2
23.2 26.5
21.2 17.5
8.9 3.0
Growth %
Exhibit 2: Trend in consol. EBITDA
Consol EBITDA (INR m)
EBITDA margin %
13.2 13.0 13.6 12.8 13.0 13.0 12.2 11.2 12.4
11.0
-12.8
-5.7
-23.5
7.4
-65.7
16.8 20.0 20.8 19.8 19.8 21.7 21.4 18.7 17.2 16.6
-13.1
Source: Company, MOFSL
Source: Company, MOFSL
22 July 2020
3
 Motilal Oswal Financial Services
Mahindra CIE
Exhibit 3: Trend in India revenues
India Revenue (INR m)
26
30
21
16
11
Growth %
Exhibit 4: Trend in India PBIT margins
India PBIT (INR m)
7.4
5
6
-8
522 875 957 934 821 993 794 678 581 528
-73
10.6 11.0
10.7
10.0 11.6 8.2
PBIT margin %
7.4
6.7
6.8
-621
3
-23.4
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 5: Trend in EU revenues
26
27
30
EU Revenue (INR m)
26
19 13
-2
-18
-27
-34
-60
Growth %
Exhibit 6: Trend in EU PBIT margin
EU PBIT (INR m)
10.9 8.9 10.1
8.5 10.2 9.3
9.0
PBIT margin %
7.5
8.7
6.0
-682
1,067 1,053 1,216 984 1,189 1,241 1,055 718 739 528
-14.5
Source: Company, MOFSL
Source: Company, MOFSL
Valuation and view
Covid-19 impact delays benefit of revenue diversification and cost cutting:
MACA has been focused on diversifying revenues in India and cutting cost in the
India and EU businesses. However, CY20 performance would be severely
impacted by the repercussions of COVID-19. 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 working toward achieving CIE’s financial objectives.
Set for growth after phase of consolidation:
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.
22 July 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 to: (a) fill the gaps in the area of strategic technologies – aluminum and
plastics, (b) get access to key players in the India PV segment (Maruti, Hyundai,
etc.), and (c) 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 INR109:
We upgrade our CY21E EPS by 2.5% (CY20 LTP) to
factor lower other expenses, lower depreciation, and Fx loss reversal. 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 cost, and
improve profitability. The stock trades at attractive valuations of 11.4x CY21E consol.
EPS and 0.8x CY21 P/B. We value MACA at 13x Jun’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 ~INR141 (13x Jun’22 consol EPS).
Exhibit 7: Revised estimates
(INR M)
Net Sales
EBITDA
EBITDA margin %
Adj. PAT
EPS
Rev
59,899
4,918
8.2
702
1.9
CY20E
Old
59,899
4,638
7.7
(222)
(0.6)
Chg (%)
-
6.0
50bp
(415.8)
(415.8)
Rev
74,092
8,886
12.0
3,651
9.7
CY21E
Old
Chg (%)
74,092
-
8,917
(0.3)
12.0
0bp
3,562
2.5
9.4
2.5
Source: MOFSL
Exhibit 8: P/E and P/B band
72
60
48
36
24
12
0
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
6.0
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
57.5
43.6
32.0
20.4
15.3
2.0
4.0
4.8
3.4
2.5
1.6
0.6
25.2
0.0
0.9
Source: MOFSL
Source: MOFSL
22 July 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
60
-24.3
39
CY15
(9M)
53
CY16
64
CY17
80
CY18
79
CY19
CY20E
74
CY21E
FY15
Growth (%)
23.7
Exhibit 10: EBITDA margin to recover in CY21E
EBITDA (INR b)
12.7
13.1
EBITDA Margins (%)
12.2
8.2
11
10
5
CY17
CY18
CY19 CY20E CY21E
Source: Company, MOFSL
9
12.0
-1.5
7.9
9.4
10.0
4
4
CY15
(9M)
5
CY16
8
Source: Company, MOFSL
Exhibit 11: Expect consol. EPS to sharply recover in CY21E
EPS
Growth (%)
419.9
Exhibit 12: Debt under control despite organic & inorganic
initiatives
Net Debt (INR b)
0.5
0.4
0.3
0.2
0.3
0.3
Net Debt:Equity (x)
38.2
3.6
CY15
(9M)
28.4
4.6
CY16
111.2
44.7
14.1
CY18
1.9
-33.2
9.4
CY19
CY20E
-80.3
9.7
CY21E
9.7
CY15
(9M)
12.3
CY16
0.2
11.2
CY21E
9.8
CY17
10.7
CY17
8.2
CY18
12.2
CY19
13.7
CY20E
Source: Company, MOFSL
Source: Company, MOFSL
Exhibit 13: RoEs to remain stable despite AEL’s acquisition
RoE (%)
Exhibit 14: FCF positive throughout, except CY19, due to AEL
acquisition
CFO
6.8
5.1
0.9
-2.2
Capex
7.1
2.0
-3.1
FCF
8.0
2.8
3.0
-4.1
-2.2
-10.3
2.8
7.3
13.3
10.6
7.7
7.0
6.6
4.8
3.0
-2.0
8.0
1.5
7.5
-1.2
-4.0
-4.5
FY15
CY15
(9M)
CY16
CY17
CY18
CY19 CY20E CY21E
Source: Company, MOFSL
CY15
(9M)
CY16
CY17
CY18
CY19
CY20E
CY21E
Source: Company, MOFSL
22 July 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
38,235
-26
8,702
-27
950
-51
12,606
-24
15,976
-24
5,748
-25
2,327
6
3,421
-38
6,139
-27
3,093
-27
780
-27
780
-27
5,807
0
59,899
-24
8.2
3.0
1.9
-80
CY21E
47,115
23
10,617
22
1,220
28
15,915
26
19,364
21
4,837
-16
0
-100
4,837
41
7,490
22
3,773
22
952
22
951
22
6,967
20
74,092
24
12.0
7.3
9.7
420
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
22 July 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
59,899
-24.3
54,981
91.8
4,918
8.2
3,144
1,774
690
362
1,446
0
1,446
743
51.4
0
702
702
-80.3
1.2
(INR m)
CY21E
74,092
23.7
65,206
88.0
8,886
12.0
3,466
5,420
684
393
5,129
0
5,129
1,478
28.8
0
3,651
3,651
419.9
4.9
(INR m)
CY21E
3,790
46,901
50,691
0
14,691
912
66,294
50,978
24,230
26,748
35,260
1,000
955
24,975
10,361
6,902
2,526
5,186
22,645
14,292
4,446
3,907
2,331
66,294
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
43,250
47,040
0
14,691
912
62,643
46,478
20,763
25,714
35,260
1,000
955
18,517
8,737
5,580
8
4,193
18,803
12,051
3,594
3,159
-286
62,643
22 July 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
CY15 (9M)
3.6
7.9
53.1
0.0
0.0
30.5
13.9
2.1
1.3
14.3
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
23.8
10.2
1.3
1.0
10.2
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
11.3
6.5
1.1
0.8
6.5
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
7.8
5.1
1.0
0.7
5.4
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
11.7
6.2
0.9
0.7
5.7
0.0
-5.9
8.0
6.5
6.8
1.8
1.3
49
34
68
0.3
CY20E
1.9
10.2
124.4
0.0
0.0
59.2
10.8
0.9
0.9
11.4
0.0
-3.1
1.5
1.7
1.4
1.3
1.0
53
34
73
0.3
CY21E
9.7
18.8
134.1
0.0
0.0
11.4
5.8
0.8
0.7
6.0
0.0
7.4
7.5
6.4
6.3
1.5
1.1
51
34
70
0.2
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)
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
205
-3,083
66
-1,877
-545
0
0
-2,356
-317
981
664
CY18
7,025
2,898
525
-1,444
-1,769
7,235
-155
7,080
-4,101
2,979
-6,201
113
-10,189
57
4,089
-525
0
0
3,621
512
719
1,231
CY19
6,279
3,161
192
-2,741
1,145
8,036
0
8,036
-10,283
-2,247
5,853
331
-4,099
2
-1,443
-523
0
0
-1,963
1,973
1,127
3,100
CY20E
1,446
3,144
328
-743
-1,338
2,837
0
2,837
-4,000
-1,163
0
362
-3,638
0
0
-690
0
0
-690
-1,491
3,100
1,609
(INR m)
CY21E
5,129
3,466
291
-1,478
-99
7,309
0
7,309
-4,500
2,809
0
393
-4,107
0
0
-684
0
0
-684
2,518
1,609
4,127
22 July 2020
9
 Motilal Oswal Financial Services
Mahindra CIE
NOTES
22 July 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
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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
********************************************************************************************************************************
22 July 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
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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.
22 July 2020
12