Mahindra & Mahindra was established in the year 1945. It is a leading name in the general-purpose utility vehicles market in India. 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. The US based Reputation Institute ranked Mahindra among the top 10 Indian companies in its Global 200: The World's Best Corporate Reputations list.

Company merged Punjab Tractors with itself from Feb 16, 2009. Company's division, Mahindra Defense Systems (MDS), has a special military vehicles (MSMV) facility at Prithla in Faribad, NCR. Company has 90% stake in the joint venture (JV) with its South African partner, and infused a further USD 3 million in the country's automotive business.

Products Overview:

Company has six state-of-the-art manufacturing facilities spread over 500,000 square meters. M&M has also set up of two satellite plants for tractor assembly. It has 49 sales offices that are having support of over 750 dealer's network across the country. In 1995, M&M took over Allwyn Nissan, an 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 21 years. The Company's Farm Equipment Sector has a presence in all these segments across all states. 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, and Zambia etc.

Recent developments:

Mahindra & Mahindra (M&M) will spend around Rs 20 billion to augment capacity at its Chakan plant, as the company looks to crack the US car market that accounts for more than a fifth of all cars sold globally. The company is currently channeling Rs 50 billion capex to build a new plant at Chakan and roll out three new vehicles. Company will start production from its Chakan plant near Pune, by this month end. M&M's new plant has a production capacity of 3,20,000 vehicles in the first phase. The company plans to increase production capacity in future. The Chakan plant will also help to cut logistics cost by up to 5% of the company. In october, Auto maker Mahindra & Mahindra launched a compact truck - Gio - meant for intra-city operations. The utility vehicle is aimed particularly at rural and semi-urban consumers. The initial production capacity for Gio stands at 20,000 units per annum.

Mahindra & Mahindra (M&M) said it will launch a motorcycle next year. The company said that they would like to be an end-to-end player in the two-wheeler segment, launching scooters and motorcycles. M&M has launched two new scooters, Rodeo (Rs 41,299) and Duro (Rs 38,299).

Valuation:

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 current market price, stock is trading at a 9.86 P/E multiple of its FY2010 estimated earnings. We recommend investors to buy "Mahindra & Mahindra" with medium to long term investment horizon.