Mahindra CIE:
As written in the chart, set up is ready technically, some fundamental event confirmation either company specific or sector specific should happen. Results on 18th Oct, 2022.
- Auto sector is breaking out after a long consolidation (along with Pharma index).
- Stock is at 14 times FY24E earnings with 15% RoE, <0.2 D/E, 15% earnings growth conservatively, 1.5% dividend yield. Sector leaders like Tube investment, Bharat forge, Endurance trade at least 50%-200% higher PE ratios (20-45 times) with similar characteristics.
- CIE group (promoter) is Spanish and has decent track record of turning around acquisitions and is risk averse & with specific objective goals.
- Benefits from Mahindra’s product success.
Investors waited a very long time for things to fall in place after CIE’s acquisition. Let’s see if they fruitily now or not.
From company’s website & I liked the last paragraph:
Technically,
Once broken out from such a long consolidation, the stocks generally move for much higher targets. There is also something seriously changing fundamentally for multiple year breakout to happen. 450-500 is a first target & then based on further technical formations, next target. Fundamentally, if we give 25 times forward earnings in a year from now, 750-800 can be achieved.
I hold this as part of technical portfolio along with Triveni Turbine & CMS Info.
Nice read on the background. Mr. Luthra is now retired.
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