Bank of America Merrill Lynch has downgraded utility vehicle and tractor maker Mahindra and Mahindra to 'underperform' from 'neutral', saying it expects slower earnings growth.
"We expect core business volumes to disappoint and profit to decelerate sharply, leading to street downgrades. Our FY13E EPS translates to low single profit growth and 9% below street, justifying non-consensus rating," the Wall Street bank said in a note on Tuesday.
It also cut its target price to Rs 645 from Rs 815. The stock closed at Rs 674 on Monday.
The bank said it expects tractor demand to be flat over the next two years due to tapering of rural incomes, slower economic activity and declining agricultural credit.
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