Long Term Buy Call For Mahindra & Mahindra

Mahindra group was founded in the year 1945 as a steel trading company; company entered into automotive manufacturing in 1947 to bring the iconic Willys Jeep onto Indian roads. Company operates in the key industries that drive economic growth, enjoying a leadership position in utility vehicles, information technology, tractors, and vacation ownership. A US $11.1 billion multinational group based in Mumbai, India, have more than 117,000 people in over 100 countries. In 2011, Mahindra featured on the Forbes Global 2000 list, a listing of the biggest and most powerful listed companies in the world. Dun & Bradstreet also ranked Mahindra at No. 1 in the automobile sector in its list of India’s Top 500 Companies. In 2010, Mahindra featured in the Credit Suisse Great Brands of Tomorrow.

Its flagship company Mahindra & Mahindra Limited is the only Indian automobile manufacturer to feature in the top 10 list of the Carbon Disclosure Leadership Index in India -
2010, created by the Carbon Disclosure Project (CDP). In 2011, Mahindra acquired a majority stake in Korea’s SsangYong Motor Company. Mahindra & Mahindra is the only Indian company among the top tractor brands in the world. The Group has a leading presence in key sectors of the Indian economy including the automobiles, financial services, aerospace, real estate, trade, retail and logistics, automotive components, after-market, information technology and infrastructure development.

Products Overview—

Company has six state-of-the-art manufacturing facilities spread over 500,000 square meters in India. M&M has also set up two satellite plants for tractor assembly. It has 49 sales offices that are having support of over 750 dealer’s network across the country. It has presence in various tractor models in the 25 HP to 55 HP segments. The factory, situated in Nasik, Maharashtra has been producing the Escort model since September 1996. M&M and International Truck and Engine Corporation have a JV to manufacture trucks and buses in India.

M&M's Farm Equipment Sector is the largest manufacturer of tractors in India with sustained market leadership. The Company's Farm Equipment Sector has a presence in all these segments across all states. M&M tractors have earned goodwill and trust of more than 1,300,000 customers and the 'Mahindra' tractor has come to be recognized as a powerful symbol of productivity and performance. In addition to capturing the domestic market, M&M's Farm Equipment Sector has also found significant success in the international market. Company’s exports tractor to the USA, Nepal, Bangladesh and Sri Lanka and African countries like Uganda, Nigeria, and Zambia etc.

In commercial vehicle segment, company Manufactures Alfa goods carrier, Gio Mini Truck, Mahindra Navistar Trucks, Bolero Maxi Truck, Genio commercial pickup, Loadking Trucks, Maxximo mini Truck, Maxximo mini Van, Tourister Buses. In Personal Vehicles segment, Mahindra manufactures Bolero (SUV), Verito Car, Mahindra REVA Electric Cars, Scorpio (MUV), Thar (UV-Jeep), Xylo(MUV).

Mahindra Two Wheelers Ltd now has a market share of 39% in the 125cc scooter segment – a milestone achieved in just two years. The 125cc segment is the fastest growing segment in scooters as more and more consumers move to higher powered scooters due to the changing profile of the urban landscape and faster moving traffic. The Mahindra Rodeo with its very innovative, contemporary features is popular amongst the Indian youth, while the Mahindra Duro is positioned as a family scooter. The Flyte is the Indian woman’s two-wheeler of choice. The stylish Stallio creates a niche for itself in the motorcycles category.

In April, 2011, Mahindra launched its sedan - the Verito. The new Verito retains the famed strengths of the Logan, while adding a new style with some key changes. Now equipped with several rugged and sporty styling elements, the Verito is all set to be the most exciting buy in the entry level sedan category for Indian consumers. It is competitively priced at Rs. 4.82 lakh
(petrol BS3 version) & 5.62 lakh (Diesel BS3 version). The BS4 compliant version is also available for BS4 markets. Mahindra & Mahindra also launched Maxximo Mini Van, its next generation passenger carrier, in Mumbai. Developed on the technologically superior Maxximo platform, the Mini Van is set to redefine the entry-level contract carriage and stage carriage segments in India. Equipped with best-in-class comfort and safety features and powered by the advanced C2 CRDe fuel-efficient diesel engine, this stylish people mover is competitively priced at Rs. 3.2 lac (Ex-Showroom BS3, Navi Mumbai).

In May 2011, Mahindra & Mahindra Ltd. launched the Maxximo Mini-truck in Nepal. This is the world’s first mini truck to be powered by a 2-cylinder CRDe engine with DOHC technology and 4 valves per cylinder. The Maxximo Mini-truck represents the next generation of mini-trucks. Since its launch in India in 2010, the Maxximo Mini-truck has already achieved a 22% market share in the small LCV (Light Commercial Vehicle) 4 wheeler category. The launch of the Maxximo Mini-truck in Nepal will soon be followed by the launch of the Maxximo Mini Van.

Mahindra REVA Electric Vehicles Pvt Ltd

Mahindra REVA is a pioneer of EV (electric vehicle) technologies and one of the first companies to introduce electric vehicles worldwide. Founded in 1994 as REVA Electric Car Company, a joint venture between the Maini Group of Bangalore and AEV LLC of USA, the company was acquired in May 2010 by the USD 11.1 billion Mahindra Group of India. The REVA electric vehicle was launched in Bangalore in 2001 and in London in 2004, (latter under the G-Wiz brand). In September 2009, at the Frankfurt Auto Show, the company unveiled two new cars, the 4 seat REVA NXR and the 2 seat REVA NXG.

Valuation & Outlook—

In FY2011 all the products in the company’s UV segment continued to do well. In this segment the company sold a total of 230110 vehicles with a market share of
60.9%. During F2011 the company exported 17138 vehicles as against 10567 vehicles last year – a growth of 62.2%. SAARC, South Africa & South America are some of the markets where the company’s products sold very well. For the second consecutive year, the company was the single largest tractors company in the world, by volume, with sales of 214325 tractors against 175196 tractors sold last year - a growth of 22.3%. The company celebrated its 28th consecutive year of domestic market leadership. At CMP, stock is trading at a 10.74 P/E multiple of its FY2012 Estimated Earnings. We recommend investors to buy Mahindra & mahindra at every dip for medium to long term investment horizon.