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ICICI Securities Report
Mahindra CIE Automotive Ltd. earnings performance in Q2 CY20 was below consensus estimates as consolidated sales slumped 66% YoY to Rs 7.3 billion with Ebitda margin down 2606 basis points. India and European businesses reported Ebitda loss with revenue declines of 72.5%/59.4% respectively. Demand pickup post reopening has been heartening with June 2020 turning Ebitda positive across regions, the management has laid out a short-term target of reaching pre-Covid-19 levels of margins by early CY21. Revenue growth in Europe could remain soft in H2 CY20 largely driven by weak commercial vehicles (CV) cycle. India business revenue growth is likely to rebound faster due to higher mix of tractors and two wheelers coupled with rising wallet share increases, exports.
We maintain our Buy rating with a target price of Rs 151 per share (earlier: Rs140).
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