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Citigroup maintains neutral on M&M, raises target price to Rs 590

Citigroup has maintained neutral rating on Mahindra & Mahindra in the long term and revised target price to Rs 590 from Rs 570. Shares of Mhaindra & Mahindra ended down 0.9% at Rs 574.95 on Monday while BSE sensex closed 21.47 points up to 40,345.08.

Company Financials

For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 23935.93 crore, down -8.08% from last quarter sales of Rs 26041.02 crore. The company has reported net profit after tax of Rs 22.33 crore in the latest quarter.

Investment Rationale

While tractor volumes could see an uptick, M&M’s largely diesel utility vehicle portfolio could face downward pressure in BS-VI regime and amidst increased competition, said Citigroup.The brokerage has cut its auto volume estimates, resulting in 1-4% cuts in revenue estimates over FY20-FY22. However, better margins results in operating profit increasing by 0-3% (lower commodity costs). Earnings estimates are increased by 4-9%, said Citigroup.
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