Smoother Ride Ahead

The slowdown in the industry has beaten down the stock. This may be an opportune time to accumulate it

- Parvatha Vardhini C

The Mahindra & Mahindra stock is a good bet for investors with a long-term perspective. Though automobile sales are now stuck in first gear and may take some time to pick up, the company’s focus on utility vehicles (UVs) — which is gaining a larger share of the passenger vehicles pie — will stand the company in good stead once the tide turns.

Signs of a turnaround in tractor sales are visible in the last one or two months. This bodes well for the company, which derives about 35 percent of its standalone revenues from tractor sales. The slowdown in the industry has beaten down the stock by almost 30 percent since our earlier ‘buy’ call in end-December 2018. The fall may be an opportune time to accumulate the stock. At the current price, the stock trades at an attractive valuation of 14 times its earnings. This is lower than the three-year historical average valuation of 28 times.

UV presence, an advantage