Mahindra CIE Automotive Q3 Review - Strong Performance Amid Supply Chain Issues: ICICI Securities
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ICICI Securities Report
Mahindra CIE Automotive Ltd.’s reported stellar Q3 CY21 results driven by strong growth in India performance (revenues up 22.3% QoQ) even as Europe business was impacted by seasonality (revenues down ~15% QoQ).
Consolidated sales grew 21% YoY / 2% QoQ to ~Rs 20 billion while margins remained resilient at ~14% (down 5 basis points QoQ).
Mahindra CIE Automotive continues to deliver on its targets, which is well reflected in free cash flow improvement (CY20/CY21E: ~Rs 2 billion/5.2 billion respectively).
We expect the company to clock cumulative free cash flow of ~Rs 13 billion over CY21-CY22E.
We believe the company’s profit before tax would continue to pivot towards India business (CY17: 45%, CY22E: 58%), which would aid valuations.
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