CIE Automotive India Ltd. share price target

We hosted Mahindra CIE (MACA) management in our annual investor conference at Singapore. Following are the key takeaways: 1) being a tier-2 B2B component supplier, MACA’s core focus is on process efficiency and automation in order to maximize profitability and, at the same time, give customers competitive pricing.

Our BUY recommendation is based on strong demand recovery in European business, growth potential in Indian operations; further headroom for operational efficiencies and a healthy balance sheet.

Mahindra CIE (MACA) has reported consolidated PAT of Rs2.2bn, up 34% YoY, in line with our estimate of Rs2.2bn, aided by revenue at Rs24.4bn, up 18% YoY, largely in line with our estimate of Rs24bn and EBITDAM at 15.6%, up 200bps YoY, 50bps ahead of our estimate in Q1CY23.

We recommend a BUY rating on the stock thereby arriving at our SOTP-based TP of Rs 475/share

We recently interacted with the management of Mahindra CIE (MACA) and following are the key takeaways from the meeting: 1) MACA is prepared to deliver 800bps higher than OEM industry growth in the longer run through mix of portfolio diversification and wallet share gains.

Mahindra CIE (MACA) once again reported resilient performance in an adverse environment with Q4CY22 EBITDAM at 13% (flat QoQ) despite lower revenue in India and an inflated cost environment in the EU. QoQ basis, India revenue was down 6% vs EU revenue being up 8%, resulting in largely flat consolidated revenue.