Mahindra & Mahindra vs Grasim 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.

Grasim's Q2 FY25 consolidated revenue grew 11% YoY to ₹33,563 crore, marking the 16th consecutive quarter of growth. However, consolidated EBITDA fell 10% YoY to ₹4,042 crore, dragged by lower profitability in cement and initial investments in the paints business (Birla Opus). The VSF division achieved its highest-ever quarterly sales volume of 219,000 tons, while chemicals EBITDA rose 16% YoY. Paints business is on track to exit FY25 with high single-digit market share, with three plants commissioned and two more starting trial runs. Management maintained guidance for Birla Opus and Birla Pivot (targeting $1B revenue in three years). Key risk: sustained competitive intensity in paints could pressure margins and delay profitability.

Guidance read

Paints: exit FY25 with high single-digit market share: Birla Opus is on track to achieve high single-digit market share in decorative paints by end of FY25, with three plants commissioned and two more starting trial runs. Birla Pivot: $1 billion revenue in three years: B2B e-commerce platform targeting $1 billion revenue within three years from FY24, with current ramp-up ahead of expectations. UltraTech: 200 MTPA cement capacity by FY27: UltraTech on track to achieve gray cement capacity of over 200 million tons per annum by FY27, including acquisitions. Net debt to EBITDA at 3.5x: Management guided net debt to EBITDA of about 3.5x, with balance rights issue of ₹2,000 crore expected in Q4.

Risk read

Key risks include Paints competitive intensity and margin pressure — Increased trade discounts and promotional spending by incumbents could pressure Birla Opus's margins and delay profitability.; Cement demand slowdown and realization decline — Cement business faced demand slowdown due to elections, heat, and extended monsoons, leading to lower realizations and impacting consolidated EBITDA.; Chlorine oversupply depressing ECU — Oversupply of chlorine led to higher negative realization, impacting chemicals ECU despite improvement in caustic prices.; Paints revenue and profitability disclosure opacity — Management declined to share specific revenue or EBITDA numbers for the paints business, citing competitive sensitivity, which limits visibility for investors..

Promise ledger

Scorecard data is being built as historical quarters are processed.