Brokerage house Mahindra is giving investment advice in CIE, stating its outlook as better. The stock can give 55% return from the current price.
Auto Stocks to Buy: Auto component maker Mahindra CIE Automotive’s shares are down more than 6 percent today and it has come to a price of Rs 180. The stock had closed at Rs 193 on Wednesday. The stock has become about 42 percent cheaper than its 1-year high. However, now after coming at a huge discount, this is the right opportunity to include these stocks in your portfolio. Brokerage houses are advising investment in the company, stating the outlook as better. The brokerage house has given a target of up to Rs 287 in the stock. In terms of today’s current price of Rs 180, it can give more than 55 percent return.
Stock may be rerating
Brokerage house Motilal Oswal says that the growth story has come on track. The growth is better due to the company’s organic initiative. Along with this, the company has taken cast cutting measures in the Indian markets as well as in Europe. This is expected to expand the margins of the company. The brokerage says that the growth in the EV portfolio and winning a large order can lead to its rerating. There is a recovery in capital efficiency. At present, the brokerage house has advised investment in the stock with a target of Rs 267.
According to the brokerage, talking about India business, there is a strong demand in PVs and CVs, which will benefit. However, the availability of semiconductors is a risk factor. However, tractor and 2W sales are expected to remain unchanged. Talking about Europe, there is a good demand for CVs.
Revival in overall growth
Brokerage house ICICI Securities has given a target of Rs 287 while giving investment advice in the stock. The brokerage says that Mahindra CIE Automotive’s EBITDA margin in Q4CY21 has been 9.4 percent. Which is 329bps less on a yearly basis. There was a drop of 550bps in gross margin. Although conso sales have grown by 5 per cent year-on-year, India’s revenue growth has been 10 per cent. Revenue growth in Europe was weak due to chip shortfalls. However, the problem of chip shortage is expected to go away in the future. This will further see a revival in the company’s profits and overall growth. The company’s RoE can improve to 14 percent till CY23E.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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