ICICDirect -Pick of the Week - Mahindra & Mahindra (Buy: Rs 777, Target: Rs 990

Mahindra & Mahindra (MAHMAH)

Price: Rs 777 Target Price: Rs 990

Mahindra & Mahindra (M&M) is the flagship of the Mahindra Group. It has two main operating divisions. The auto division manufactures utility vehicles (UVs), light commercial vehicles (LCVs) and three-wheelers. The tractor division makes agricultural tractors and related implements. Other entities, spun-off into separate business groups, include hospitality, trade and financial services, auto components, IT, telecom and infrastructure development.

At the current price of Rs 777, the stock is attractively valued at 18.5x FY07E and 16.9x FY08E EPS. With new launches, rapidly growing core business, acquisition synergies and boost from its holdings in subsidiaries, the prospects of the company look promising. We expect the stock to touch around Rs 990, with its holdings in subsidiary companies valued at around Rs 438
per share.


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