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.
- Classic legends; Java, Yezdi and BSA brands.
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.