Mahindra & Mahindra vs Bajajfinsv Q2 FY25

M&M delivered a strong Q2 FY25 with consolidated PAT up 35% YoY to INR 3,171 crore, driven by broad-based strength across auto, farm, and services. Auto revenue grew 15% YoY with PBIT margin expanding 140bps, supported by market share gains (21.9%) and successful price repositioning of XUV700. Farm domestic margins improved 150bps to 18.7% despite international headwinds. Services PAT surged 80% YoY, led by Tech Mahindra and Mahindra Finance. Management guided for mid-to-high teens auto volume growth and 6-7% tractor industry growth in H2, with EV launches (BE 6e, XEV 9e) in early 2025. Key risk: elevated launch costs and EV ramp-up may pressure near-term margins.

Guidance read

Auto volume growth of mid-to-high teens: Management expects full-year SUV portfolio volume growth of 15%-18%. Tractor industry growth of 6-7% for FY25: Revised tractor industry growth outlook to 6%-7% for the full year, implying 13%-15% H2 growth. EV launches in early 2025: Two electric origin SUVs (BE 6e and XEV 9e) to be revealed in November 2024 and in market early 2025. Auto PBIT margin medium-term goal of ~10%: Management targets auto PBIT margin to first reach FY19 levels of around 10% as a medium-term goal.

Risk read

Key risks include International farm business stress — North American tractor market has shrunk significantly (11 quarters of degrowth) and Turkish hyperinflation impacts accounting; management is evaluating but not exiting yet.; Urban demand slowdown — Management acknowledged fundamental stress in urban India, which could impact SUV demand if not offset by rural recovery.; EV launch costs and margin dilution — Q3 will see marketing and depreciation costs for EVs with no revenue, and EV margins as a percentage will be lower than ICE due to denominator effect.; LCV demand recovery uncertainty — LCV industry has been subdued for several quarters; while October showed positive turnaround, sustainability is uncertain..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.

Bajaj Finserv reported consolidated revenue growth of 30% YoY to ₹33,703 crore, with PAT up 8% YoY. The general insurance business (BAGIC) saw core premium growth of 11% (3x market), though headline GWP fell 20% due to a government health shift to Q3. Combined ratio worsened to 101.4% from 95.3% due to higher natural catastrophe claims. Life insurance (BALIC) grew individual retail new business by 34% YoY, but VNB margins declined 3.8pp to 9.2% due to a mix shift toward ULIPs. Bajaj Finance AUM grew 29% with strong asset quality (GNPA 1.06%). Management highlighted disciplined underwriting and risk management, but flagged near-term headwinds from regulatory changes (surrender value norms) and competitive pressure in credit life. Key risk: further margin compression in life insurance if ULIP dominance persists.

Guidance read

BALIC VNB margin improvement in H2: Management expects VNB margins to improve in H2 as product mix rebalances away from ULIPs and commission deferrals take effect. Bajaj Finserv Direct breakeven in 1-2 quarters: The marketplace business expects to break even on a cash basis within the next couple of quarters. Capital deployment of ₹500-600 crore in health & AMC by Mar'26: BFL plans to invest ₹500-600 crore in health tech and asset management over the next 18 months. BAGIC core growth to remain above market: Management expects core premium growth to continue outpacing the industry, driven by disciplined underwriting.

Risk read

Key risks include Allianz exit from JV creates strategic uncertainty — Allianz has informed Bajaj of its decision to exit the joint venture; management provided no further details, creating uncertainty around future ownership and operations.; VNB margin compression from ULIP mix and regulatory changes — VNB margins fell 3.8pp YoY to 9.2% due to higher ULIP sales; new surrender value norms may further pressure margins.; Motor TP price hike delay hurting growth — No TP price hike for three years has led to underwriting losses; management has reduced exposure, capping motor growth.; Retail health profitability under pressure — Medical inflation and hospital fraud are squeezing margins; management is cautious on growth in this segment..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.