Fw: Investor's Eye: Update - M&M (Ssangyong deal to strengthen luxury portfolio)

Investor's Eye [November 24, 2010]  Sharekhan www.sharekhan.com Summary of Contents STOCK UPDATE Mahindra & Mahindra Cluster: Apple Green Recommendation: Hold Price target: Rs809 Current market price: Rs785 Ssangyong deal to strengthen luxury portfolio  Mahindra and Mahindra (M&M) has signed a definitive agreement with South Korea?s Ssangyong Motor Company (Ssangyong) to acquire a 70% stake in the latter for $463 million (approximately Rs2,080 crore) of which $378 million (approximately Rs1,700 crore) is from new stocks and $85 million (approximately Rs380 crore) from corporate bonds. The acquisition will be finalised by March 2011. Ssangyong would utilise the money to repay debt. We maintain our Hold recommendation and price target for M&M. We expect its automotive volumes (including pick-ups) to grow by 29% and tractor volumes to grow by 10.8% in FY2011. Our sum-of-the-parts (SOTP) valuation target for M&M is Rs809 per share (the core business is valued at 13x FY2012 earnings and the subsidiaries are valued at Rs140 per share).   Click here to read report: Investor's Eye   Regards, The Sharekhan Research Team myaccount@sharekhan.com  Manage your newsletter subscriptions