Mahindra CIE Automotive - Growing Profitably, Efficiently: ICICI Securities

ICICI Securities Report

We recently interacted with the management of Mahindra CIE Automotive Ltd. and following are the key takeaways from the meeting:

1. Mahindra CIE is prepared to deliver 800 basis points higher than original equipment manufacturer industry growth in the longer run through mix of portfolio diversification and wallet share gains;

2. set to cater electric vehicles in India and Europe through steel and aluminum casting/forging other than stamping and gears;

3. confident of ~17-18% and ~16-17% India and Europe Ebitdam in CY23-24, driven by productivity improvement in India and stabilising power cost in Europe;

4. Europe EV risk to get mitigated by expansion in aluminum forging capability in coming years and thus, Mahindra CIE is looking forward to deliver ~5% revenue compound annual growth rate in Europe;

5. to keep capex/sales ratio ~6% in coming years and use free cash flow proceeds to pare off debt and fund inorganic growth needs, especially in areas like plastic parts and EV parts;

6. Europe truck forging sale deal is likely to get executed within the next couple of quarters and may help Mahindra CIE reduce debt further.

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