Shareholder’s have approved the schemefor amalgamation.
Merger is now only subject to the approval of Bombay High Court following which the completion of the amalgamation process is likely to conclude by mid-July or August.
ICICI Securities have upgraded the target to 175.
However the price target is not important over here and I have quoted the same’coz it is a part of the report. It is important toview Mahindra CIEas a turnaround story and therefore necessary to look at it with a broader view point for the long term.
Below as quoted by ICICI Sec.
Possible multiplier in financials to reflect in price & multiples
“Mahindra CIE Auto is a unique case of valuation considering the massive turnaround possibilities in MCI and we are factoring in the same. We expect the turnaround to be significant, with non-linear profit growth of ~140% CAGR in FY14E-17E. We expect utilisation levels to improve leading to EBIT margins rising to ~8.3% and RoCE expansion to ~14.6% in FY17E. We expect a significant increase in dividend payouts to ~40% in line with CIEâs philosophy of high dividend payouts (~40-50%). We have valued MCI on a combinational basis of PE and EV/EBITDA, considering it is a turnaround company. Also, we wanted to be more prudent on possibly valuation methodology anomalies. Thus, we arrive at an upgraded target price of |175 with upside of ~54%. We maintain BUY.”