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Mahindra & Mahindra Limited Q3 FY24 Earnings Conference Call Insights

Key highlights from Mahindra & Mahindra Limited (M&M) Q3 FY24 Earnings Concall

  • Auto/Farm Performance
    • Mahindra Auto continues strong momentum, gaining SUV market share to 21% and becoming #1 in SUVs.
    • Mahindra at 49.6% market share in LCVs after gaining significantly.
    • Auto performance showing benefits of strategic focus on SUVs and LCVs, with strong market share gains.
    • New bookings at 50k per month with supply increased to 40k.
    • Seeing higher cancellations in December and turn of year
    • Farm industry expected to be down 5-6%, but Mahindra gained 80 bps share.
    • Mahindra Farm now over 40% market share, exemplifying strong execution.
    • Some indicators showing potential for improvement, but overall continued weakness in rural spending power.
  • Finance Turnaround
    • Mahindra Finance GS3 at all-time low of 4%, showing risk management.
    • Strong disbursement growth and sequential NIM increase at Finance.
    • Resulting improvement has turnaround firmly on track.
  • Auto Capacity Expansion
    • On track for 49k capacity exiting FY23 as previously guided.
    • M7M won’t fully utilize for next 2-3 months due to factors.
    • Projecting higher mid-teen volume growth, ahead of industry.
  • Growth Drivers
    • Financial services saw 24% revenue growth, with Mahindra Accelo at 21%.
    • Beyond Auto and Farm, other businesses contributing.
    • Adjusting for Susten gain and impairment, profits grew 34%.
    • Auto profits major driver of increase at addition of INR721cr.
  • Finance Business Update
    • Finance profits down but credit quality improving.
    • Absence of prior year credit cost reversals impacting.
    • But underlying business on track based on targets.
  • Order Book Status
    • Thar, Scorpio Classic, Scorpio N have long waiting periods.
    • Bolero available without delay.
    • XUV300 being ramped down ahead of mid-cycle refresh.
    • With 2.5-3 year old XUV700, need to signal faster availability.
    • Open up lower variants to broaden funnel from INR25L top-end focus.
  • Electric Vehicle
    • Recent EV price cuts from competition after M&M cuts.
    • Enabled by battery price declines amid still small category.
    • M&M targeting 25% share with upgraded XUV400 launch.
    • EV adoption has faced issues like range anxiety.
    • Ecosystems expected to develop over time.
  • Margin Growth Outlook
    • Growth more important than margins for 2023.
    • Will use cost levers to maintain affordability.
    • Expect continued business performance improvement.
  • Emission Compliance
    • Comfortably meeting 2024 CAFE norm requirements.
    • Don’t foresee added EV needs before BS7 norm.
    • Current EV volumes sufficient looking ahead.
  • Rural Exposure/Potential
    • Slowdown impacted Bolero with rural exposure.
    • Rural-driven Scorpio Classic very strong.
    • Bolero and XUV300 can see uplift with rural recovery.
    • However, not expecting dramatic bounce back effect as performance driven more by wider trends.
  • Thar/Scorpio Capacity Expansion
    • Current Thar capacity split evenly between 2WD and 4WD.
    • 2WD ramp-up constrained by 1.5L engine availability.
    • 5-door Thar capacity separate and on track.
    • Underestimated continued strong demand for Classic.
    • Incremental capacity increases challenging and limited.
    • Expect Classic volumes to remain around 4-4.5K/month.
  • ICE Product Roadmap
    • Significant ICE launches upcoming with Thar 5-door and XUV300.
    • Conscious of still needing strong ICE portfolio amid EV shift.
  • Tractor/Truck Demand Trends
    • Southern markets slowing more than other regions now.
    • Leading to margin mix impact with south higher HP bias.
    • Selective market activation with top dealers first for trucks.
    • Calibrated approach to prove model before scaling.
    • Can attain >INR10k cr revenue at 7-8% share for trucks.
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