30 June 2020 Since resumption of operations, M&M; is seeing good on-ground momentum in its key business of tractors as well as for products like Bolero and Scorpio. According to the management, its internal index for rural spend has been at the highest level for many quarters. It is driven by (a) unusually strong water reservoir levels, (b) good Rabi crop, and (c) expectation of normal monsoons. Demand in Jun20 is higher than last year. With one of the highest exposures to rural markets (~65% of volumes), M&M; is well positioned to benefit from rural recovery considering its dominance in tractor/LCV business. According to our estimates, rural markets should contribute ~63% to M&Ms; revenues and 81% to core PAT in FY22E. With faster rural recovery, tractor volumes are expected to be flat in FY21E compared to the 20% expected decline in the auto segment. This should result in higher revenue contribution from FES 38.4% in FY21E (v/s 34.