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Mahindra CIE Automotive: Buy for 29% upside in 1 year -
Mahindra CIE Automotive: Buy for 29% upside in 1 year
Rudra Shares and Stock Brokers | Published: 13 Jul, 2017  | Source :

Company Overview

CIE Automotive is an industrial group specialized in managing HIGH VALUE-ADDED PROCESSES, and is supplying components and subassemblies for the automotive market. It has presence in 4 continents and 15 countries.

CIE Automotive focuses its resources on three strategic business areas:

  • Automotive components (with 6 basic technologies – Aluminum, Forging, Stamping and Tube Welding, Machining, Plastic and Casting, present in 9 countries).
  • Biofuels, (with biodiesel plants operating in Spain and Italy, presence in Brazil and Guatemala, and its own sales network) and
  • Dominion, Technological solutions and services (with plants in Spain, Mexico, Brazil, Argentina and Chile)

Valuation Conclusion

Quantum of orders from Chakan, going forward will be something close to Rs.  25 crores -Rs.  30 crores, expects next quarter to give even better EBITDA margin as the volumes will go up because no more demonetization effect would be seen on account. The actions (such as improving operational efficiencies, close monitoring, improving price realization and reduction in people) have been initiated by the management under guidance of CIE’s European Technical team to improve the operations. Further, the Company is looking forward to growth opportunities in India and would likely double the market cap by 2020.

Based on the overall economic indicators in India and a normal forecast for the monsoon this year, Company remain optimistic about its performance in next quarter. Moreover, with the acquisition of Bill Forge & that Bill Forge Mexico has already started production, sales is two month ahead of schedule and it is already running three shifts and the demand is very strong bring about the positive indicators for the company to grow further.

Estimating the share price of the company as per P/E valuation, putting the estimated P/E of FY17E at 37x & the estimated EPS at Rs.  8.29., the estimated share price for next 1 year tenure turns around to be Rs.  308. Therefore, we recommend to BUY this script.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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