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ICICI Securities Report
Mahindra CIE Automotive Ltd. reported strong beat with its Q2 CY22 Ebitda margin at 13.3% (up 67 basis points QoQ despite input cost adversities) versus our estimate of ~10.2%.
Consolidated revenues were up 32% YoY driven by 46% / 20% YoY growth in India / Europe sales.
Metal inflation pass-on accounted for ~10% of the YoY revenue growth in each of the geographies as the company was able to pass-on 60-70% of raw material cost inflation to customers in the Europe.
We expect Mahindra CIE to deliver mean free cash flow of ~Rs 5 billion per annum in CY22E-CY23E. With return on equity improving to ~15% by CY23E (~8% in CY21), ~7% FCF yield, 2% dividend yield and lean balance sheet, we believe the company is attractive at present.
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