22 March 2017 Mahindra & Mahindra - Moneycontrol.com

22 March 2017Update | Sector: Automobiles

Mahindra & Mahindra

BSE SENSEX S&P CNX CMP: INR1,271 TP: INR1,546(+22%) Buy 29,168 9,030

Stock Info Bloomberg MM IN Equity Shares (m) 621 52-Week Range (INR) 1,509/1,142 1, 6, 12 Rel. Per (%) -6/-11/-14M.Cap. (INR b) 753.2 M.Cap. (USD b) 11.5 Avg Val, INRm 1,421 Free float (%) 74.7

Financials Snapshot (INR b) Y/E Mar 2017E 2018E 2019E Net Sales 426.4 486.9 559.9 EBITDA 47.6 53.7 64.0 PAT 35.2 38.0 44.6 EPS (INR) 58.8 63.5 74.5 Gr. (%) 6.8 8.1 17.4 BV/Sh (INR) 405.7 443.3 491.2 RoE (%) 14.3 13.6 14.5 RoCE (%) 11.9 11.5 12.5 P/E (x) 21.6 20.0 17.0 P/BV (x) 3.1 2.9 2.6

Shareholding pattern (%) As On Dec-16 Sep-16 Dec-15 Promoter 25.3 25.4 25.5 DII 19.1 17.8 18.8 FII 41.0 42.1 42.9 Others 14.6 14.7 12.9

FII Includes depository receipts

Stock Performance (1-year)

Best bet on rural recovery Passenger UVs to witness stable competitive environment

Best bet on rural recovery: M&M is the best play among key auto OEMs on the rural market recovery, with highest revenue contribution from rural markets. For M&M, rural market contributes ~56% to revenues, 77% to S/A PAT and ~75% to SOTP. We expect rural markets to fully recover from impact of demonetization from 1QFY18 onwards. Tractors back on track after demonetization impact: After initial impact of demonetization, M&M’s tractor volumes are back on track and have grown at ~22.5% in FY17YTD. Despite such strong recovery in volumes, M&M’s FY17 tractor volumes at ~259k will be lower than previous peak of FY14 (at ~267k). We estimate ~12.5% CAGR in tractor volume growth over FY17-19E (implies ~4.2% CAGR over FY14-19E). Passenger UVs: Worst is behind us as rural recovery to enable market share recovery…: With impact of demonetization gradually fading and lull in competitive launches in UVs, we expect M&M’s UV business to be back on growth path driven by a) rural recovery, b) launch of petrol variants in existing models, c) 1 new product launch each in FY18 (MPV U321) and FY19 (Compact SUV S221 based on highly successfully Ssangyong’s Tivoli). We estimate modest ~2% CAGR in passenger UV volumes for M&M over FY17-19E. …whereas M&M’s stronghold of Pick-ups should see strong recovery: M&M’s Pick-up UVs contribute ~43% of M&M’s UV volumes. Pick-up segment has been gaining share at the expense of LCVs (Tata ACE) in the <3.5ton segment. The share of Pick-ups in overall LCV (<3.5 ton) segment increased from 33% in FY11 to 64% in 9MFY17, as it offered overall very strong package vis-à-vis SCVs. M&M market share has remained stable at 66% (but off from peak of 73% in FY15) in Pick-ups and at 51% (+4pp since FY15) in LCVs (<3.5Ton) in 9MFY17. We believe worst is behind in the pick-up segment and volumes should grow for M&M at ~14% CAGR over FY17-19E. EBITDA margins to remain stable: M&M has several levers to support margins viz a) mix (higher tractor share and pick-ups), b) positive operating leverage (15% revenue CAGR v/s 2% CAGR in FY14-17E) and c) partial pass-through of commodity price inflation to off-set impact of merger of 2W business on S/A margins. We expect EBITDA margins to remain stable at ~13.6% over FY17-19E, translating into ~15% CAGR in EBITDA over FY17-19E and ~13% CAGR in S/A EPS (higher tax rate, as not yet factoring in 2W business merger and related tax shield). Valuation and view: Recovery in rural markets improves visibility of recovery in volumes in both core businesses. After a gap of four years, both the businesses – Tractors and UVs – would be delivering double-digit growth over FY17-19E. M&M is one of the cheapest large cap auto stock with valuations of 17x/14.2x FY18/19E consol EPS and 15.2x/12.8x on core PE basis (adj for value in subs after 20% Hold-co discount). Maintain Buy with TP of ~INR1,546 (FY19 SOTP based).

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M & MSensex - Rebased

Jinesh Gandhi ([email protected]); +91 22 6129 1524 Jigar Shah ([email protected]); Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Mahindra & Mahindra

22 March 2017 2

Best bet on rural recovery M&M is the best play among key auto OEMs on the rural market recovery, with

highest revenue contribution from rural markets. For M&M, rural market contributes ~56% to revenues, 77% to S/A PAT and

~75% to SOTP. We expect rural markets to fully recover from impact of demonetization from

1QFY18 onwards. After gap of 4 years, both the businesses i.e Tractors & UVs would grow ~10%

volume CAGR over FY17-19 (v/s 1% CAGR decline over FY14-17E). This would be supplemented with recovery in key subsidiaries like Ssangyong,

MMFSL and Tech Mahindra.

Exhibit 1: M&M has highest rural exposure among key Auto OEMs

56 50

30

M&

M

HMCL

MSI

L

Rural Contribution (% of revenues)

Source: Company, MOSL

Exhibit 2: Rural markets contribute ~56% to M&M’s revenues, 77% to PAT and ~75% to SOTP


Tractors back on track after demonetization impact After initial impact of demonetization, M&M’s tractor volumes are back on track

and have grown at ~22.5% in FY17YTD. Despite such strong recovery in volumes,M&M’s FY17 tractor volumes at ~259k will be lower than previous peak of FY14(at ~267k).

We estimate ~12.5% CAGR in tractor volume growth over FY17-19E (implies~4.2% CAGR over FY14-19E).

M&M’s recent market share gain should sustain at higher level as it plans tolaunch new tractor platform by 3QFY18 in both M&M and Swaraj brand, alongwith variants of Yuvo and Nuvo.

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44

Rural Urban

77

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Rural Urban

Mahindra & Mahindra

22 March 2017 3

Tractor finance availability is improving post demonetization, though assetquality pressures are yet to ease off.

Further, Government's target to double farm income in 5 years would not onlyhelp in reducing volatility in tractors, but also act as catalyst to drive penetrationof implements (~2% of M&M’s FES revenues v/s global avg. of ~66%).

Exhibit 3: Industry tractor volumes trending below long term average


Exhibit 4: M&M’s tractor volumes recovering post demonetization impact till Jan-17


Exhibit 5: M&M’s tractor market share improved considerably in FY17 on the back successful new launches


Exhibit 6: MMFSL’s tractor AUM growth showing initial signs of pick-up…


Exhibit 7: …but asset quality under pressure impacted by demonetization


0

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M&M Dom. Tractor market share (%)

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GNPA (% of Total Assets)NNPA (% of Total Assets)

Mahindra & Mahindra

22 March 2017 4

Passenger UVs: Worst is behind us as rural recovery to enable market share recovery… M&M’s UV volume recovery was stalled (growth of ~10% in FY17YTD Oct) by

demonetization hurting both passenger UVs (given higher rural centric portfolio)and pick-up segment.

With impact of demonetization gradually fading and lull in competitive launchesin UVs, we expect M&M’s UV business to back on growth path driven by a) ruralrecovery, b) launch of petrol variants in existing models, c) 1 new product launcheach in FY18 (MPV U321) and FY19 (Compact SUV S221 based on highlysuccessfully Ssangyong’s Tivoli).

Further, we expect competitive intensity in SUV segment to stabilize as thereare no SUV launches in next few quarters from mainstream players, as against 5-6 launches in last 18 months.

We estimate modest ~2% CAGR in passenger UV volumes for M&M over FY17-19E.

Exhibit 8: M&M’s passenger UV volumes got impacted due to demonetization (‘000 units)


Exhibit 9: But key models are already witnessing recovery (units)

Source: SIAM, MOSL

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Demonetization impact

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Bolero Scorpio XUV5OO

Mahindra & Mahindra

22 March 2017 5

Exhibit 10: Competitive intensity stabilizing, as upcoming launches are from small players Company Model Segment Month of launch Renault Duster UV1 Jul-12 Ford EcoSport UV1 Jun-13 Nissan Terrano UV1 Oct-13 Honda Mobilio UV1 Jul-14 Hyundai Creta UV1 Jun-15 Maruti S Cross UV2 Jul-15 Renault Lodgy UV2 Nov-15 Maruti Brezza UV1 Mar-16 Honda BRV UV1 Apr-16 Toyota Innova Crysta UV2 Apr-16 Tata Motors Hexa UV2 Jan-17 Honda WRV UV1 Mar-17 Jeep Compas UV2 3QFY18 Renault Kaptur UV2 3QFY18 Tata Motors Nexon UV1 3QFY18


Exhibit 11: Ssangyong has interesting products, which M&M can leverage upon – Tivoli (LHS) and Concept XAVL (RHS)


…whereas M&M’s stronghold of Pick-ups should see strong recovery M&M’s pick-up segment (~43% of UV volumes) had been under pressure (~10%

CAGR decline over FY14-16) due to rural weakness and constraints in availabilityof finance for small commercial vehicles.

However, pick-up UVs gained market share over LCVs (Tata ACE) in the <3.5tonsegment. The share of Pick-ups in overall LCV (<3.5 ton) segment increased from33% in FY11 to 64% in 9MFY17, as it offered overall very strong package vis-à-visSCVs.

M&M market share has remained stable at 66% (but off from peak of 73% inFY15) in Pick-ups and a 51% (+4pp since FY15) in the LCV (<3.5Ton) in 9MFY17.

With improvement in availability of finance and impending rural recovery, webelieve worst is behind in the pick-up segment and volumes should grow forM&M at ~14% CAGR over FY17-19E.

Mahindra & Mahindra

22 March 2017 6

Exhibit 12: Pickups + SCV(<3.5Ton) recovery was halted by demonetization…

Source: SIAM, MOSL

Exhibit 13: …but Feb-17 witnessed initial signs of recovery for M&M Pick-ups (‘000 units)


Exhibit 14: Pick-up segment has been gaining share in LCVs <3.5 tons (incl pick-ups)…

Source: SIAM, MOSL

Exhibit 15: …driving M&M’s market share in overall LCV (<3.5 tons) segment

Source: SIAM, MOSL

Exhibit 16: Trend in Passenger UVs v/s Pick-ups for M&M


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Pick ups+SCV(<3.5T) Growth (%, RHS)

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Share of Pick ups in LCV<3.5Ton

66 64 6572 73 69 66

38 36 3546 47 52 51

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Pick up Pick ups+SCV(<3.5T)

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Passenger Uvs Pickups

Mahindra & Mahindra

22 March 2017 7

EBITDA margins to remain stable M&M has several levers to support margins viz a) mix (higher tractor share and

pick-ups), b) positive operating leverage (15% revenue CAGR v/s 2% CAGR inFY14-17E) and c) partial pass-through of commodity price inflation to off-setimpact of merger of 2W business on S/A margins.

We estimate high margin businesses to grow faster i.e tractors (12.5% CAGR)and pick-ups (~14% CAGR), and slower growth in passenger SUVs at ~2% CAGR.

We expect EBITDA margins to remain stable at ~13.6% over FY17-19E,translating into EBITDA growth of ~15% CAGR over FY17-19E and ~13% CAGR inS/A EPS (higher tax rate, as not yet factoring in for 2W business merger andrelated tax shield).

Exhibit 17: Divergent trend in PBIT margins of both businesses of M&M – Tractors at all-time high, but Auto at all-time low


Exhibit 18: For first time, M&M’s PBIT margins are lower than MSIL


Valuation and view We now believe the worst is over for MM in both Tractors (driven by normal

monsoon) and UVs (driven by recent launches). Recovery in rural markets improves visibility of recovery in volumes in both core

businesses. After a gap of four years, both the businesses – Tractors and UVs –would be delivering double-digit growth over FY17-19E.

M&M is one of the cheapest large cap auto stock with valuations of 17x/14.2xFY18/19E consol EPS and 15.2x/12.8x on core PE basis (adj for value in subs after20% Hold-co discount).

Maintain buy with TP of ~INR1,546 (FY19 SOTP based).

13.310.9 11.8

9.5 9.0 9.98.2

17.515.7 15.5 17.1

14.9 15.718.0

FY11

FY12

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FY16

9MFY

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Auto FES

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Mahindra & Mahindra

22 March 2017 8

Exhibit 19: M&M: Sum-of-the-parts (INR/share) FY18E FY19E

Core EPS (excl. subsidiary dividend) 55.1 65.5 PE attributable (x) 17 17 Value of core business 936 1,113 Value of subsidiaries @ Hold Co discount 20 1. Tech Mahindra 163 163 2. M&M Financial Services 121 121 3. Mahindra Lifespaces 8 8 4. Mahindra Holidays 35 35 5. Ssangyong 60 60 6. Mahindra CIE 18 18 7. CIE Automotive Spain 29 29 Target price (after 20% discount) 1,370 1,546 Upside (%) 7.8 21.6

Source: MOSL

Exhibit 20: M&M’s Core P/E at premium to LPA

Source: MOSL

Exhibit 21: M&M’s Core P/B in-line with LPA

Source: MOSL

Exhibit 22: Comparative Valuations

Auto OEM's CMP Rating TP P/E (x) EV/EBITDA (x) RoE (%) RoCE (%) EPS CAGR

(INR)* (INR) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY16E-18E Bajaj Auto 2,853 Buy 3,432 20.9 17.8 15.0 12.4 30.0 31.0 29.2 30.1 10.4 Hero MotoCorp 3,311 Neutral 3,190 18.9 17.4 12.5 11.4 40.1 36.8 39.1 36.1 9.8 TVS Motor 433 Buy 462 36.4 28.1 22.5 17.6 26.4 27.9 27.2 30.4 30.1 M&M 1,271 Buy 1,536 21.0 17.0 15.8 14.0 14.3 13.6 11.9 11.5 7.4 Maruti Suzuki 6,010 Buy 6,808 23.8 19.2 15.4 12.1 22.8 23.2 30.7 31.2 31.6 Tata Motors 460 Buy 653 36.1 13.0 5.8 4.1 5.2 13.3 4.8 10.7 -1.9 Ashok Leyland 87 Buy 114 18.1 13.6 9.5 7.5 23.1 26.3 17.0 20.6 28.2 Eicher Motors 24,542 Buy 27,458 39.3 28.3 30.6 23.2 41.1 41.2 27.5 30.9 32.7 Auto Ancillaries Bharat Forge 1,015 Buy 1,110 39.5 27.1 18.6 14.8 15.9 20.6 10.9 14.8 15.5 Exide Industries 215 Buy 233 26.0 22.2 16.5 14.1 14.2 14.9 14.7 15.5 14.6 Amara Raja Batteries 869 Buy 1,087 29.7 23.0 17.0 13.6 21.6 23.1 20.6 22.1 14.7 BOSCH 22,950 Neutral 22,049 46.9 35.9 36.7 26.3 18.8 23.4 26.3 32.5 15.0 Endurance Tech 721 Buy 732 29.8 23.9 13.7 11.6 21.2 21.8 15.4 17.2 20.8


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Mahindra & Mahindra

22 March 2017 9

Operating metrics

Exhibit 23: Snapshot of Revenue model 000 units FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E Tractors 235 224 268 234 214 260 293 328

Growth (%) 10.2 -4.9 19.5 -12.6 -8.7 21.5 13.0 12.0 % of total volumes 32.6 29.0 34.9 33.5 30.2 34.6 35.7 36.2

UVs 384 470 428 398 424 431 465 512 Growth (%) 31.6 22.4 -8.9 -7.2 6.7 1.5 8.0 10.0 LCVs (MTBL) 14 12 8 5 6 7 7 9 Growth (%) 24.8 -13.9 -31.4 -34.7 20.6 5.0 10.0 15.0 3-Ws 67 66 63 57 55 52 55 59 Growth (%) 8.5 -2.9 -3.4 -10.3 -3.2 -5.0 5.0 8.0 Verito 18 16 8 2 3 3 3 3 Growth (%) 61.2 -12.2 -48.0 -80.5 62.5 0.0 0.0 0.0 M&HCVs (MTBL) 3 3 2 3 6 6 7 8 Growth (%) 0.0 -14.9 -34.2 -3.9 15.0 0.0 0.0 0.0 Total Autos 487 548 500 465 494 490 527 580 Growth (%) 27.5 17.7 -8.8 -7.0 6.3 -0.9 7.7 9.9 % of total volumes 67.4 71.0 65.1 66.5 69.8 65.4 64.3 63.8 Total volumes 722 772 767 699 708 749 821 908 Growth (%) 21.9 9.5 -1.2 -10.2 1.3 7.1 9.5 10.6 ASP (INR'000/Unit) 437 507 514 542 571 556 579 603 Growth (%) 11.8 16.1 1.4 5.5 5.2 -2.7 4.3 4.0 Net Sales (INRb) 314 399 400 379 404 421 481 553 Growth (%) 36.2 27.1 0.2 -5.2 6.6 4.2 14.2 15.1


Mahindra & Mahindra

22 March 2017 10

Story in charts: Tractors to drive growth for M&M

Exhibit 24: Tractors to see strong growth in FY17-19


Exhibit 25: New product launches to drive UV CAGR of ~9%


Exhibit 26: Improving mix to drive realizations


Exhibit 27: Margins to improve in the near term


Exhibit 28: Capital efficiency has weakened


Exhibit 29: FCF to remain high despite high capex


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3,88

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267,

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(12.6) (8.7)

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Tractor volumes (units) Growth (%)

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281

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397,

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(8.9) (7.2)

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UVs (incl pick-ups) Growth (%)

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390,

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Net realizations (INR/unit)

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13.4 13.5 13.3

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EBITDA (incl. MVML) (%)

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25.8

28.4

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106.

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RoE (%) RoIC (%)

28.4 42.4 37.8 35.6

55.5 50.4 49.2 57.0

(13) (14) (10)(20) (22) (25) (25) (25)

14 28 27

39 37 29 29

38

FY12 FY13 FY14E FY15 FY16 FY17E FY18E FY19E

CFO Capex FCF

Mahindra & Mahindra

22 March 2017 11

Financials and Valuations Income Statement (INR Million) Y/E March 2014 2015 2016 2017E 2018E 2019E Net Op. Income 405,085 384,448 408,751 426,396 486,875 559,869 Change (%) 0.2 -5.1 6.3 4.3 14.2 15.0 Total Expenditure 357,873 342,714 362,832 378,839 433,214 495,877 EBITDA 47,212 41,734 45,919 47,557 53,662 63,992 Margins (%) 11.7 10.9 11.2 11.2 11.0 11.4 Margins (%, incl MVML) 13.5 12.5 13.4 13.5 13.3 13.6 Depreciation 8,633 9,749 10,681 13,296 15,633 17,733 EBIT 38,579 31,985 35,238 34,261 38,029 46,259 Deferred Revenue Exp. 0 0 0 0 0 0 Int. & Finance Charges 2,592 2,143 1,580 1,328 1,308 1,308 Other Income 7,180 9,883 8,499 11,545 11,360 11,763 Non-recurring Expense 0 0 0 0 0 0 Non-recurring Income 528 3,357 687 0 0 0 Profit before Tax 43,694 43,082 42,845 44,478 48,081 56,714 Tax 6,111 8,478 10,799 11,844 13,943 16,447 Eff. Tax Rate (%) 14.0 19.7 25.2 26.6 29.0 29.0 Profit after Tax 37,584 34,604 32,046 32,634 34,137 40,267 Change (%) 13.2 -7.9 -7.4 1.8 4.6 18.0 % of Net Sales 9.3 9.0 7.8 7.7 7.0 7.2 Adj. Profit after Tax 37,129 31,908 31,532 32,634 34,137 40,267 Change (%) 14.1 (14.1) (1.2) 3.5 4.6 18.0 Adj. PAT (incl MVML) 38,605 31,595 32,935 35,172 38,004 44,619

Balance Sheet (INR Million) Y/E March 2014 2015 2016 2017E 2018E 2019E Share Capital 2,952 2,957 2,963 2,963 2,963 2,963 Reserves 164,961 189,594 214,109 237,447 259,732 288,146 Net Worth 167,912 192,551 217,072 240,410 262,695 291,109 Deferred tax 8,897 9,797 12,475 12,475 12,475 12,475 Loans 48,787 46,615 40,861 40,861 40,861 40,861 Capital Employed 225,596 248,963 270,408 293,746 316,031 344,445

Application of Funds Gross Fixed Assets 107,961 117,385 142,955 173,610 198,610 223,610 Less: Depreciation 49,192 58,091 63,426 76,722 92,355 110,089 Net Fixed Assets 58,770 59,295 79,529 96,888 106,255 113,522 Capital WIP 12,284 21,788 15,655 10,000 10,000 10,000 Investments 113,799 131,382 135,204 143,947 151,447 158,947 Curr.Assets, L & Adv. 128,034 116,985 133,736 133,571 151,002 179,148 Inventory 28,036 24,376 26,879 29,205 33,348 38,347 Inventory Days 26 23 24 25 25 25 Sundry Debtors 25,098 25,580 25,121 28,037 32,014 36,813 Debtor Days 23 25 23 24 24 24 Cash & Bank Bal. 29,504 20,648 22,970 29,043 32,555 43,903 Loans & Advances 39,640 40,054 52,367 40,887 46,687 53,686 Others 5,756 6,328 6,399 6,399 6,399 6,399 Current Liab. & Prov. 87,291 80,486 93,715 90,659 102,672 117,171 Sundry Creditors 60,688 53,655 67,636 61,331 70,030 80,529 Creditor Days 55 52 61 53 53 53 Other Liabilities 5,863 6,143 5,964 5,964 5,964 5,964 Provisions 20,740 20,688 20,115 23,364 26,678 30,678 Net Current Assets 40,743 36,499 40,021 42,912 48,330 61,977

Misc. Expenditures 0 0 0 0 0 0 Application of Funds 225,596 248,963 270,408 293,746 316,031 344,445

Mahindra & Mahindra

22 March 2017 12

Financials and Valuations Ratios Y/E March 2014 2015 2016 2017E 2018E 2019E Basic (INR) Fully diluted EPS 62.0 53.3 52.7 54.5 57.0 67.3 FD EPS (incl MVML) 64.5 52.8 55.0 58.8 63.5 74.5 Consolidated EPS 72.7 47.8 53.6 60.7 75.0 89.4 Cash EPS 77.5 70.4 71.2 77.5 84.0 97.9 Book Value per Share 284.4 325.6 366.3 405.7 443.3 491.2 DPS 14.0 12.0 15.0 17.5 20.0 20.0 Payout (Incl. Div. Tax) % 25.7 24.5 26.3 35.8 40.3 34.2 Valuation (x) P/E 19.7 24.1 23.1 21.6 20.0 17.0 Consolidated P/E 17.5 26.6 23.7 21.0 17.0 14.2 Cash P/E 16.4 18.0 17.8 16.4 15.1 13.0 EV/EBITDA 15.8 18.0 16.3 15.6 13.7 11.3 EV/Sales 1.9 2.0 1.9 1.8 1.5 1.3 Price to Book Value 4.5 3.9 3.5 3.1 2.9 2.6 Dividend Yield (%) 1.1 0.9 1.2 1.4 1.6 1.6 Profitability Ratios (%) RoE 23.6 17.7 15.4 14.3 13.6 14.5 RoCE 18.7 14.2 12.6 11.9 11.5 12.5 ROIC 55.6 35.4 30.7 24.2 23.2 25.9 Turnover Ratios Debtors (Days) 23 25 23 24 24 24 Inventory (Days) 26 23 24 25 25 25 Creditors (Days) 55 52 61 53 53 53 Working Capital (Days) 37 35 36 37 37 41 Asset Turnover (x) 1.8 1.5 1.5 1.4 1.5 1.6 Growth (%) Sales 0.2 -5.1 6.3 4.3 14.2 15.0 Operating Profit 11.7 10.9 11.2 11.2 11.0 11.4 Net Profit 14.1 -14.1 -1.2 3.5 4.6 18.0 EPS 14.1 -14.1 -1.2 3.5 4.6 18.0 Leverage Ratio Debt/Equity (x) 0.3 0.2 0.2 0.2 0.2 0.1

Cash Flow Statement (INR Million) (INR Million) Y/E March 2014 2015 2016 2017E 2018E 2019E OP/(Loss) before Tax 43,166 38,332 41,612 34,261 38,029 46,259 Int./Dividends Received -3,455 -3,723 -3,027 11,545 11,360 11,763 Depreciation & Amort. 8,633 -9,749 11,086 13,296 15,633 17,733 Direct Taxes Paid -8,942 -8,468 -9,279 -11,844 -13,943 -16,447(Inc)/Dec in Wkg. Capital -2,126 15,802 14,393 3,181 -1,906 -2,300Other Items CF from Oper.Activity 37,277 32,195 54,785 50,439 49,173 57,008 Extra-ordinary Items 528 3,357 687 0 0 0 Other Items 0 0 0 0 0 0 CF after EO Items 37,805 35,552 55,473 50,439 49,173 57,008 (Inc)/Dec in FA+CWIP -10,053 -20,226 -21,597 -25,000 -25,000 -25,000Free Cash Flow 27,224 11,969 33,189 25,439 24,173 32,008 (Pur)/Sale of Invest. -7,295 -4,005 -13,865 -8,743 -7,500 -7,500CF from Inv. Activity -17,348 -24,231 -35,461 -33,743 -32,500 -32,500Change in Net Worth 1,839 26 0 2,755 1,920 1,920 Inc/(Dec) in Debt 1,465 -3,847 -9,500 0 0 0 Interest Paid -2,608 -2,419 -2,110 -1,328 -1,308 -1,308Dividends Paid -8,935 -9,609 -8,461 -10,539 -12,021 -12,021CF from Fin. Activity -8,239 -15,848 -20,071 -9,112 -11,408 -11,408Inc/(Dec) in Cash 11,689 -7,884 -747 7,584 5,265 13,100 Add: Beginning Balance 17,814 29,504 20,648 22,970 29,043 32,555 Closing Balance 29,504 21,788 20,069 30,723 34,475 45,823

Mahindra & Mahindra

22 March 2017 13

N O T E S

Mahindra & Mahindra

22 March 2017 14

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