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Mahindra & Mahindra- Reports healthy performance in Q2FY25, guides for upbeat H2FY25

ICICIdirect Research 08 Nov 2024 DISCLAIMER

On standalone basis, top-line for the quarter came in at ₹27,553 crore (up 13.3% YoY) with automotive volumes growing 9% YoY at 2.31 lakh units and tractor sales volume at 93K units (up 3.7% YoY).

EBITDA in Q2FY25 came in at ₹3,950 crore with corresponding EBITDA margins at 14.3% (down 54 bps QoQ).
Automotive segment EBIT margins remained flat at 9.5% on a QoQ basis, while Farm Equipment segment margins were at 17.5% (down 100 bps QoQ but up 150 bps YoY).

On the SUV side volumes grew 18% YoY driven by new launches. M&M leads the segment with a revenue market share of 21.9% in Q2FY25. The company aspires to grow mid to high teens in FY25E amidst domestic PV industry growth pegged at <5%. It is aiming to launch 23 new vehicle models by 2030. This includes 9 new ICE SUVs. Additionally, it will also launch 7 new Battery Electric Vehicles models and 7 new LCV models including 5 ICE and 2 Electric Vehicle variants. Recently it has teased its new EV brands and will shortly launch in it the domestic markets.

On the tractors front, it has guided for healthy ~15% YoY volume growth for the industry in H2FY25 with FY25E volume guidance upgraded to ~6-7% on YoY basis.

We maintain a positive view on M&M and retain our BUY rating on the stock amidst its consistent positive surprise on new product launches, ability to grow ahead of market and persistent focus on capital efficiency (RoE>=18%). We now value M&M at SOTP-based target price of ₹3,600 (15x FY26E standalone EV/EBITDA; 25% hold co. discount to investments, ₹615/share value for its E-PV arm).

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