Sharekhan Encourages Buying Shares of Mahindra and Mahindra

Sharekhan Encourages Buying Shares of Mahindra and MahindraIndia's leading broking house Sharekhan is optimistic with the performance of Mahindra and Mahindra (M&M) at the stock exchange. The Company suggests buying shares of M&M with the targets being 735 in its August 8, 2011 research report.

The total growth in the revenue of Mahindra & Mahindra (M&M)'s marked at increase of 30.5% year on year for Q1FY2012 came in marginally lower than our estimates. The operating profits exceeded the estimation due to the cost rationalization efforts of the company. Q1FY2012's profit after tax (PAT) was also witnessed at a higher position than the estimates made by Sharekhan amounting to Rs604.9 crore. The capital used for the working increased by 40% YoY.

The Company had witnessed an increase in the expenditure on raw materials by 34% amounting to Rs 4,373 crore, also the buying of traded goods increased by 3 times amounting to Rs 719 crore. M&M's passenger car, commercial vehicle and two-wheeler sales volumes in the quarter increased by 21 % in the domestic market, while tractors sales grew by 14 % to 1.33 lakh units.

As per a statement of M&M, "The growth in the profit of the company despite the relentless increase in material costs is due to good volume performance by both vehicles and tractors and tight control on expenses".