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ICICI Direct Report
As per regulatory filing, Mahindra CIE Automotive Ltd. has put its forging business in Germany (wholly owned subsidiary) on the block for sale with its holding company being empanelled to scout for buyers in this domain.
In a separate filing, the company also informed about its intention to change its name from Mahindra CIE Automotive to CIE Automotive India Ltd.
Mahindra CIE’s German forging business (Mahindra Forgings Europe AG) constituted 10% plus of its consolidated sales as of CY21 and is loss making at the profit after tax level. It largely manufactured forging components for truck segment in Europe.
Mahindra CIE, in one of the earlier interactions, had indicated at challenges at its German operations due to geopolitical conflict and higher energy prices but informed about no cash burn in this domain.
Selling this part of the business bodes well for Mahindra CIE’s consolidated margin profile and capital efficiency matrix.
The company’s Indian business clocks steady state margins of ~15% versus ~10-12% clocked at its European operations.
CIE group has also steadily increased stake in Mahindra CIE by ~5% in the past 12 months, reinforcing foreign promoter’s commitment to this business.
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