Mahindra CIE Automotive (MAHAUT) Research Report By ICICI-Direct

Mahindra CIE Auto is a unique case of valuation considering the massive turnaround possibilities. We expect utilisation levels to improve leading to EBIT margins rising to 8% and RoCE expansion to ~15% in FY17E. We expect dividend payout of ~30%, in line with CIE’s philosophy of high dividend payouts (~30-50%). CFOs are also likely to balloon to ~Rs. 700- 800 crore (FY17E). We value MCI at 10x FY17E EV/EBITDA multiple (~25% discount to Bharat Forge), considering its steady turnaround in operations. Our target price of Rs. 260 implies an upside of ~29%. We continue to recommend BUY.

Download IDirect Mahindra CIE Q3FY15