For 2QFY2019, M&M posted subdued performance on both, top-line as well as bottom-line fronts. Revenues grew by ~7% yoy to `12,989cr. On the bottom-line front, M&M reported growth of ~26% yoy to `1,649cr on the back of one time exceptional income and lower taxes.

Outlook and Valuation: We expect M&M to report net revenue CAGR of ~13% to ~`62,235cr over FY2018-20E mainly due to healthy growth in automobile segment like Utility Vehicles (on the back of new launches and facelift of some models) and strong growth in tractors segment driven by strong brand recall and improvement in rural sentiment. Further, on the bottom-line front, we expect CAGR of ~22% to `5,991cr over the same period on the back of margin improvement. Thus, we recommend BUY on the stock with target price of `1,050.

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