Mahindra Forgings: Underweight

At the CMP of Rs111.8, the stock is trading at a FY11E and FY12E P/E multiple of 57 times and 44 times, its FY11E and FY12E earnings of Rs1.96 and Rs2.55 respectively. An underweight rating is initiated on the stock, as way2wealth's target price for FY11 is at Rs 118 based on a P/E multiple of 60 times FY11E earnings of Rs1.96 per share. Though the stock offers minimal downside, its ROE for FY11E stands at 2.4%, which is viewed as unattractive

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