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Mahindra & Mahindra Limited — Q2 FY24
M&M reported a strong operating performance in Q2 FY24, with standalone revenue up 17% YoY and PAT up 67% YoY, driven by robust auto demand and market share gains.
bullish
high
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M&M reported a strong operating performance in Q2 FY24, with standalone revenue up 17% YoY and PAT up 67% YoY, driven by robust auto demand and market share gains. Auto EBIT margins expanded 200 bps to 7.9% (excluding a one-time gain), while farm margins remained resilient despite a flat industry. SUV bookings remain strong at 286,000, with production ramping to 49,000/month by year-end. The company reiterated its 18% ROE target and highlighted growth gems like electric three-wheelers (61% market share) and Susten (1.5 GW to 7 GW). Key risks include potential margin pressure from World Cup sponsorship costs and slower EV adoption in the entry-level segment.
एमएंडएम ने दूसरी तिमाही में अच्छा प्रदर्शन किया। कंपनी की कमाई पिछले साल से 17% बढ़ी और मुनाफा 67% बढ़ा। इसकी वजह गाड़ियों की जबरदस्त मांग और बाजार में हिस्सेदारी बढ़ना है। ऑटो सेक्शन का मुनाफा 2% बढ़कर 7.9% हो गया। ट्रैक्टर का कारोबार भी स्थिर रहा। एसयूवी की बुकिंग 2.86 लाख है और कंपनी साल के अंत तक हर महीने 49,000 गाड़ियां बनाएगी। कंपनी ने 18% रिटर्न का लक्ष्य दोहराया। इलेक्ट्रिक तिपहिया में 61% बाजार हिस्सेदारी और सस्टेन (बिजली कंपनी) 1.5 गीगावॉट से 7 गीगावॉट तक बढ़ रही है। जोखिम: वर्ल्ड कप स्पॉन्सरशिप से मुनाफा कम हो सकता है और सस्ती इलेक्ट्रिक गाड़ियों की मांग धीमी है।
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World Cup sponsorship impact on Q3 margins
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SUV Bookings
286,000
+18% YoY
Open bookings remain strong, led by Scorpio, Thar, and XUV700 families.
Auto EBIT Margin
7.9%
+200 bps YoY
Excluding a one-time gain of INR 210 crore, margin expanded on operating leverage.
Farm Market Share
41.5%
+150 bps YoY
Gained share despite a flat industry, driven by new launches Oja and Naya Swaraj.
Electric Three-Wheeler Market Share
61%
+14x in 3 years
Volume expected to reach 74,000 units this year, up from 5,000 three years ago.
What Changed vs Last Quarter
NEW
Auto production capacity to reach 49,000/month by March 2024
Production is currently at 42,000/month and on track to hit 49,000 by end of fiscal year.
NEW
Mahindra Finance credit cost target of 1.5%-1.7% for FY24
Credit cost expected to decline from 2.3% in H1 to 1.5%-1.7% by year-end, driven by structural asset quality improvement.
NEW
Susten capacity target of 7 GW in 4 years
Susten plans to grow from 1.5 GW to 7 GW in 4 years, with 1 GW of bids already won in H1.
UPDATED
Farm machinery revenue growth target of ~40% for FY24
Management expects farm machinery revenue to grow about 40% for the full year, up from 35% in H1.
DROPPED
Auto capacity to reach 39,000 units per month by Q4 FY24
Management confirmed that production capacity will increase to 39,000 units per month by the end of Q4 FY24, with current production already at that level.
DROPPED
EPS growth target of 15-20%
Management reiterated a long-term EPS growth target of 15-20%, despite a strong 60% growth in Q1.
DROPPED
ROE threshold of 18%
Management committed to maintaining an ROE of at least 18%, with current ROE at 24%.
NEW RISK
World Cup sponsorship impact on Q3 margins
Management flagged a three-digit crore one-time expense in Q3 for World Cup sponsorship, which could pressure margins.
NEW RISK
EV adoption slower than expected in entry-level segment
XUV400 volumes are intentionally low due to planned upgrades, and the entry-level EV segment faces cost and demand challenges.
NEW RISK
Potential PLI certification delay for SUV EVs
M&M has not yet applied for final PLI certification for the XUV400, while a competitor has already received it, posing a competitive risk.
RISK GONE
Semiconductor supply disruptions
Management cautioned that semiconductor issues could resurface, potentially impacting production volumes.
RISK GONE
RBL investment strategic rationale questioned
Analysts raised concerns about the lack of immediate tangible benefits from the RBL Bank investment, with management citing a long-term optionality that may not materialize.
RISK GONE
Farm sector demand volatility
Management noted difficulty in forecasting tractor demand due to monsoon variability and base effects, with potential downside if rains disappoint.
Fast read
Guidance and risk preview
Production is currently at 42,000/month and on track to hit 49,000 by end of fiscal year.
Management flagged a three-digit crore one-time expense in Q3 for World Cup sponsorship, which could pressure margins.
View Risks →