How do you analyse the M&M numbers at first glance?
Abhishek Gaoshinde: So, prima facie, operating performance is slightly better than our estimates and we believe that it may be driven by higher-than-expected EBIT performance in the tractor segment. Given that in Q4, the tractor segment’s EBIT margin was impacted due to the inventory correction and in this quarter, which is a seasonally strong quarter for a tractor segment, I think that a strong performance on the tractor segment and the steady performance of the automotive segment has translated into higher than expected EBITDA margin performance.
Although the bottom line is appearing lower than estimated, it may be mainly due to the lower than expected other income. So, operating performance-wise better than Street’s estimate.
What are your thoughts on the valuations at 3000 odd? The way they are coming out with the numbers, is it like baked in or do you think there is an option value as far as their EV business is concerned, which may get unlocked in the coming years?
Abhishek Gaoshinde: We value stocks like Mahindra and Tata Motors, on SOTP basis. The kind of traction which it has been showing, especially in the automotive business that was earlier lagging – the valuations have been improving and in this particular year, when new capacity is coming out, along with the strong order book position, it is expected to outperform the industry growth, especially in the PV segment which is supporting the valuation and the probable value unlocking in the EV business is definitely in the estimates. Overall we are positive on Mahindra & Mahindra.
