Mahindra & Mahindra Limited Annual Analyst Meet Conference Call Insights

Key highlights from Mahindra & Mahindra Limited (M&M) Annual Analyst Meet Concall

 

Q&A Highlights:

Kapil – Nomura – Analyst

• Organizational changes brought in to achieve the bold targets.

Anish Shah – MD

• Targets set:
  • 18% ROE.
  • 15-20% EPS growth.
• For each commitment, there is a clear plan what each business and function needs to do and how to get there.
• Got back to the fiscal discipline M&M had in the past.
  • Significant reduction in fixed cost.
  • Strong management of cost at all levels.
• Culture of collaboration.

 

Analyst

• Plans for long term funding of EV business?

Anish Shah – MD

• In future, M&M is going to have more of its capex go to EV.
• Currently, at this stage M&M is comfortable for EV in terms of funding.

 

Analyst

• Margin guidance from a medium term perspective.

Rajesh Jejurikar – ED

• M&M took aggressive price increases but it was on commodity and some margin improvement.
  • Doesn’t want to take advantage of the situation.
  • Want to build the business back with 4-5 strong brands.
• Target to improve cost as a percentage of revenue by 3%.
  • On track on this improvement.
• Remains optimistic on the margin uptick on auto.

 

Pramod Amthe – InCred Capital – Analyst

• What makes M&M go for tie up with OEMs now with Volkswagen for EVs in the context of M&M having very low design cost?

Rajesh Jejurikar – ED

• Volkswagen is not an equity tie-up, it’s a supply agreement to buy components.
• EV space is about collaboration and partnerships.
• The tie up will give M&M a greater assurance on quality and a faster go to market.

  

Anoop Bhaskar – IDFC AMC – Analyst

• How is M&M placed on efficient capital allocation going forward?

Anish Shah – MD

• M&M will continue to maintain discipline and make sure every rupee of capital used generates more than adequate returns.

 

Yogesh – HSBC – Analyst

• Subsidiary ROE targets of 18% are evaluated on absolute or relative to the peers.

Anish Shah – MD

• 18% is at the group level.
• Will be different for different subsidiaries vs. the peers.

 

Yogesh – HSBC – Analyst

• On two-wheeler, given the focus on right to win, where is this business right now?

Anish Shah – MD

• Not getting back into mass market two-wheelers in India.

Rajesh Jejurikar – ED

• Globally, there are two parts to this business.
  • Classic legends; Java, Yezdi and BSA brands.
    • A co-investor leads the management of this company.
  • Peugeot scooters in France.
    • Has a full time CEO.

 

Binay Singh – Morgan Stanley – Analyst

• SUV order book, if M&M consumer is upgrading or new to brand.

Rajesh Jejurikar – ED

• On 700, have a hugely new customer base, with the level of automatic in the portfolio.
• 700, 300, and Thar have more than 50% automatic in the portfolio, and 30% gasoline, having non-traditional M&M customers.
• All the launches are getting new customer base.

 

Nitin Arora – Axis Mutual Fund – Analyst

• Thoughts on choosing a diesel vs. a hybrid for SUVs?

Rajesh Jejurikar – ED

• Clear preference from customer for diesel. 70% plus are diesel booking.

Anish Shah – MD

• M&M having a strong set of engines; both diesel and gasoline.
• M&M sees the move going from here to electric, not as much to hybrid.