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Operating margin exceeds estimates; maintain Buy
* Standalone revenue (including MVML) grew 5% yoy to Rs138bn, slightly above estimate of Rs134bn, due to better realizations. We expect growth to remain healthy, at 10% over FY19-21E, led by 13%/4% increase in Automotive/Farm equipment divisions.
* EBITDA margin expanded 30bps qoq to 13.5% (our estimate: 12%), led by better scale, reduction in discounts, softening commodity prices, lower employee expenses, and cost-reduction efforts. We expect margins to remain above 13% over FY20-21E.
* Market share gains are expected across segments in FY20, driven by new products in UVs (Marazzo MPV, XUV300 compact UV), CVs (BlazoX MHCV, Furio ILCV range from 9T to 16T), and 3Ws (Treo Electric).
* Stock valuations are inexpensive at a Core P/E of 11x on FY20 estimates. We maintain Buy with an SOTP-based TP of Rs790, based on 14x core FY21E EPS and the value of investments at Rs268/share.
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