Mahindra & Mahindra Buy Call:


The US $6.7 billion Mahindra Group is among the top 10 industrial houses in India. Mahindra is the market leader in multi-utility vehicles in India. It made a milestone entry into the passenger car segment with the Logan. Mahindra & Mahindra is the only Indian company among the top tractor brands in the world. The Group has a leading presence in key sectors of the Indian economy, including the financial services, trade, retail and logistics, automotive components, after-market, information technology and infrastructure development.

Mahindra's Farm Equipment Sector is the proud recipient of the Japan Quality Medal, the only tractor company worldwide to be bestowed this honour. It also holds the distinction of being the only tractor company worldwide to win the Deming Prize. The US based Reputation Institute recently ranked Mahindra among the top 10 Indian companies in its Global 200: The World's Best Corporate Reputations list.

Company has six state-of-the-art manufacturing facilities spread over 500,000 square meters. M&M has also set up two satellite plants for tractor assembly. It has 49 sales offices that is having support of over 750 dealers network across the country. In 1995, M&M took over Allwyn Nissan, a loss-making Indo-Japanese LCV maker, which expanded its market presence in the LCV segment. It introduced three new tractor models in the 30-35, 40, 45-50 HP segments, apart from its traditional strength in the 25 HP segment. The factory, situated in Nasik, Maharashtra has been producing the Escort model since September 1996. In 2005, M&M also took over the forging business of Amforge Industries. The business was merged in a wholly-owned subsidiary, Mahindra Automotive Steels.

M&M and International Truck and Engine Corporation entered into a JV to manufacture trucks and buses in India. Also with a view to entering the passenger car segment, a growing segment of the Indian automobile sector, M&M entered into a joint venture with Renault to introduce the new sedan Logan in India. The company entered new export markets including South Africa, Uruguay, UAE and Malaysia.

Company’s Automotive Division manufactures utility vehicles, light commercial vehicles and three wheelers. M&M's Farm Equipment Sector is the largest manufacturer of tractors in India with sustained market leadership of over 19 years. The Company's Farm Equipment Sector has a presence in all these segments across all states. M&M tractors have earned goodwill and trust of more than 8,50,000 customers and the 'Mahindra' tractor has come to be recognized as a powerful symbol of productivity and performance. In addition to capturing the domestic market, M&M's Farm Equipment Sector has also found significant success in the international market. Around 90% of Company’s tractor exports are to the USA, M&M also exports tractors to neighboring countries like Nepal, Bangladesh and Sri Lanka and African countries like Uganda, Nigeria, Zambia etc.

The company announced that Punjab Tractors has been amalgamated with effect from Feb 16, 2009. In March, company’s division, Mahindra Defense Systems (MDS), has inaugurated a special military vehicles (MSMV) facility at Prithla in Faribad, NCR. S. The company has hiked its stake in the joint venture (JV) with its South African partner to 90% from 51%, and infused a further USD 3 million in the country’s automotive business. CARE reaffirmed the rating of AA+ assigned to the long-term bank facilities of the company aggregating Rs 1.78 billion.

Mahindra has recently made an entry in the two-wheeler segment, which will see the company emerge as a full-range player with a presence in almost every segment of the automobile industry. At CMP, stock is trading at a 6.4 P/E multiple of its FY2011 Earnings. We recommend investors to buy Mahindra & mahindra at every dip for long term investment horizon.

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