Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.
This is an entirely free service. No payments are to be made.
M&M: Cosmetic changes - Views on News from Equitymaster
Mahindra & Mahindra (M&M) Group is restructuring its 18 subsidiaries into three business clusters - Mahindra and Mahindra (M&M), Mahindra Holding & Finance Ltd. (MHFL), and Mahindra Information Technology Services Ltd. (MITSL). While M&M will retain the auto-related businesses, the info tech business will be under MISTL. The other businesses comprising realty, consultancy will be under MHFL.
M&M (FY99 Sales Rs 34.5 bn) is a dominant player in the mfg of utility vehicle segment as well as the tractor segment of the automobile industry. It is also engaged in the manufacture of light commercial vehicles and is aiming to become the largest player (in terms of volumes) in the world tractor market. M&M also has a presence in the information technology, consultancy and realty sectors.
Amongst these subsidiaries, some have a high earnings growth potential like Mahindra - British Telecom, while others do not have such potential. Amongst those that are not performing well are Mahindra Realty and Mahindra Exports.
The analysts had voiced concerns regarding the lack of transparency in the balance sheet. Moreover, they feared that the cash flows of M&M could be diverted to cash flow deficit divisions, thus ultimately putting pressure on the bottomline of M&M. Therefore, this exercise has been initiated to clean the balance sheet and make it more transparent.
The mixed performance of the subsidiaries is of concern because when consolidation of accounts becomes mandatory the company could take a hit on its bottomline due to the bad performance of these subsidiaries. Therefore, apart from restructuring the company should take concrete measures to improve the performance of these subsidiaries.
Market View:
The stock has been rated as a 'SELL' mainly on account of the company's high capex plans, high inventory levels and sluggish utility vehicle sales growth. However, on the prospects of an agricultural boom, some analysts are expecting the company to be a direct beneficiary and have rated the stock as a 'BUY'.
Equitymaster requests your view! Post a comment on "M&M: Cosmetic changes". Click here!
Thank you for posting your view on Equitymaster!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!
Mahindra & Mahindra has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, revenues grew by 15.6% YoY and adjusted net profits grew by 18.5%.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
Equitymaster requests your view! Post a comment on "M&M: Cosmetic changes". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!