Buy this stock and get set to earn as much as 30% in just one year, say experts
The fundamentals of this stock suggest upside potential of 30 per cent , says equity experts.
t a time when foreign investors are taking out their money from the Indian equity and bond markets on anxiety over the next round of Sino-US trade talks and Indian equity indices in limbo due to the Lok Sabha elections, market experts are suggesting domestic investors to go through each and every detail of any stock on their radar before making any investment decision. In this regard, a certain stock has emerged with the right kind of potential going forward. Experts have suggested investors think about the Mahindra and Mahindra stock as its fundamentals are giving positive indications and the counter may even give around 30 per cent return in long-term (one year) perspective.
Mahindra and Mahindra EBIDTA grew just 1% YoY at Rs 17bn (8% below market estimates) while margin declined 150bp YoY at 13.2% (100bp below our est). M&M+MVML revenue grew 12% YoY at Rs 128.9bn (In-line with our est) led by 11% YoY total volume growth; EBIT margin in FES segment came in at 19.2% (down 130bp YoY) while auto segment EBIT margin came in at 5.8% (down 260bp YoY) mainly due to launch related expenses which should continue in Q4. Automotive net realization remained flat YoY while FES realization increased 1% YoY.
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Experts believe Mahindra and Mahindra UVs volume growth to accelerate with the recent launches and upcoming Mahindra XUV300 in Q4FY19. While the UV portfolio is subdued till now. They are impressed with the LCV, M&HCV, 3W and export segments which have pulled up the YTDFY19 total automotive volume growth to 13%, despite UV growth being flat. Experts remain cautious on the tractor growth outlook for FY20-21E owing to cyclicality and have assumed a 4% CAGR over FY20-21E.
On suggestion to the market investors in regard to Mahindra and Mahindra shares, Jay Kale, CFA at Elara Securities told in a detailed research report, "The fundamentals of the counter suggests an upside potential of 30 per cent. An investor can buy the scrip for Rs 893 target." Right now, Mahindra and Mahindra shares are revolving around Rs 683.
Standing in sync with Elara Securities views Naveen Kumar Dubey, Research Analyst at Narnolia Financial Advisors told Zee Business Online, "The management has lowered its tractor volume guidance to 10% from earlier 12% due to concern on Rabi sowing and reservoir level being low in few states like Maharashtra, Gujarat, Andhra Pradesh, and Telangana. The growth outlook for the overall industry continues to be muted due to benign consumer sentiments. However, new product launches in a high volume segment (UVs) will help the company to regain lost market share in medium to long term as per the management. Further, management’s strategy to achieve a 50% revenue contribution from the tractor segment in the next 3 years coupled with cost-cutting initiatives."
On suggestion to the equity traders and investors in regard to Mahindra and Mahindra shares, Swati Singh, Research Analyst at the Narnolia Financial Advisors revealed, "The counter fundamentals are strong and indicate an upside potential target for around Rs 782/stock levels in mid-term perspective." Swati Singh of Narnolia Financial Advisors suggested investors maintain a buy position for the mid-term target of Rs 782/stock. If the stock sustain above this level then a fresh bull run can be expected in the stock.