Mahindra CIE (MCIE) is one of the top global forging players with a strong presence in both Europe and India. Currently 2/3rd of the revenue comes from Europe, while the rest is from India.
We believe despite demand push back for short term, MCIE’s key customer’s are outperforming the industry growth. As a result, the current order remain strong for the company.
Increased business with existing customers owing to supplier consolidation and shifting the production to India, as primary hub for export is adding value for the company.
Q1-CY22 revenue came at 18.2 per cent YoY due to growth coming from both India and Europe business by 15 per cent and 20 per cent respectively. EBITDA margin came at 11.5 per cent y-o-y (-170bps q-o-q) with gross margin largely flat, despite input cost pressure.
We marginally upgrade our revenue estimates of CY22 by 5 per cent owing to strong pick up expected from its key clients both in the domestic and European business. Considering the growth potential and inexpensive valuation, we rollover our estimate to CY23 and value MCIE a 12xCY23 EPS and arrive at a target price of ₹236 and maintain our buy rating.