M&M; announced a JV with Ford in October 2019 and we were quite enthused by M&M;'s access to Ford's automobile capacity in India. M&M;, however, has notified that it is amicably calling off the JV with ford amid increase in capital requirement for the proposed JV (initially envisaged at ~| 1,400 crore). M&M; has not made any meaningful investments on this...

Capital allocation exercise gathered pace in 1HFY21 as MM continued its focus on exiting non core/loss making business. We reiterate BUY on M&M; (MM) led by 1) positive rural sentiments and stable tractor outlook providing margins and cash-flow cushion to compete in UV business, 2) renewed focus to gain back lost market share in UV business with new product launches, 3) dominating presence in LCVs to help ride CV upcycle and 4) increased focus on capital allocation with exit of non-core...

Our positive view on MM is based on a strong recovery in Tractors, LCVs recovering in 2HFY21 and positive development on capital allocation. We were not banking on any positive development in its SUV business, but have taken stock of MM's SUV and LCV business in this note. Both businesses have so far positively surprised us. The company is reorienting its SUV business to maintain its DNA and brand position and garner market share. Thar's success shows that it is on the right track. The MM and Ford JV got delayed due to the COVID-19 pandemic. However, the product pipeline reflects some promising upgrades in its UV portfolio....

Festive season demand, high kharif output, new product launches, improving supply side constraints should drive the growth momentum in upcoming quarter. Hence, we upgrade our rating on the stock to BUY with a revised TP of Rs. 751 based on 24x FY22E adj. EPS. On track to recovery with tractor sales leading from front Q2FY21 revenue rose 44.4% QoQ (-1.5% YoY) to Rs. 23,567cr on the back of improved demand seen in both farm equipment and auto segment. Among its largest segments, Automotive segment revenue grew 70.2% QoQ (-8.1% YoY) to Rs. 11,081cr, while...

Positive tractor outlook and focus on capital allocation to drive performance Mahindra & Mahindra (M&M;) posted 2QFY21 adjusted PAT of Rs13.1bn, down ~3.2% YoY and a tad lower than our expectation, mainly due to lower-than-expected other income. It reported an exceptional loss of Rs22.49bn for the quarter towards impairment of Gipps Aerospace and other international investments. Net revenue of Rs76.97bn grew by ~6.6% YoY and was ~4% above our estimate. Average selling price (ASP) for the Automotive and Farm Equipment segments (FES) grew by 19.8% YoY and 2.6% YoY, respectively. Net revenue for the Automotive segment declined by ~8% YoY whereas FES revenue grew by ~33% YoY. EBITDA margin stood at 17.8%, up 370bps YoY and 280bps above our estimate, driven by better realisations in FES, favourable...

M&M;'s (MM) Q2FY21 revenue grew 6% YoY to Rs 115.9bn and EBITDA margin was above our estimate at 17.8%.

Mahindra & Mahindra's (MM) 2QFY21 earnings were driven by strong performance in the Tractor business and steady recovery in Autos. Further, it announced exit from the Aerospace business, which had losses of INR3-4b in FY20. While MM's core business would recover faster, focus on tightening capital allocation could act as a re-rating catalyst. Hence, we see twin levers of EPS growth and re-rating. We upgrade FY21/FY22E EPS by 8%/6.5% to reflect volume upgrade in Tractors as well as tighter cost control. MM is one of the few Auto stocks...

FY21 domestic tractor industry growth guidance at 10-12% (v/s 5% earlier). M&M;'s 2QFY21 results exceeded our expectations with record EBITDA margins delivery by M&M;+MVML's at 17.8% (+370bp YoY, PLe ~14%). The beat was led by strong performance in FES. EBIT margins for FES was recorded at 24.4% (+5% YoY) led by operating leverage and cost controls. In 2QFY21, with focus on prudent capital allocation, M&M; exited Gipps Aerospace business (Aircraft manufacturing division). Also it was able to turn...

We expect recovery from hereon as markets open up. The management is focusing to clear supply chain constraints and increase utilization level to meet up the demand. We reiterate our HOLD rating on the stock...

Mahindra & Mahindra's business is diversified across farm equipment, auto and automotive components, real estate, hospitality, information technology, defence and aerospace and financial services, Q1FY21 PAT slumps 94% to Rs 55 cr...

M&M; + MVML Profit for the quarter de-grew by 97% YoY to Rs 678 Mn during Q1FY21.Net sales stood at Rs. 55,894 mn (-56.4% YoY / -37.9% QoQ). Gross margins expanded by 31 bps to 35.2% driven by commodity cost benefits and cost rationalization measures by the company. EBITDA was at Rs. 5,732 mn (-68.0% YoY / -53.3% QoQ) with margin of 10.3% (-38bps YoY / 34bps QoQ). The total volumes (auto + tractors) de-grew by 58.5% YoY to 90,536 units led by subdued demand. The blended realisation has seen an...

Positive tractor outlook and focus on capital allocation to drive performance Mahindra & Mahindra (M&M;) posted 1QFY21 adjusted PAT of Rs389.6mn, down ~96% YoY and lower than our expectation of Rs1.1bn, mainly due to lower than expected other income. It reported an exceptional gain of Rs288mn for the quarter towards profit on the sale of certain non-current assets by Ssangyong (SYMC). Net revenue of Rs55.89bn fell by ~56.4% YoY and was 3% above our estimate. Average selling price (ASP) for the Automotive and Farm Equipment segments grew by 13.4% YoY and 0.3% YoY, respectively. Net sales for the two segments declined by 74.5% YoY and ~24% YoY, respectively. EBITDA margin stood at 10.3%, down 370bps YoY and 70bps below our estimate. This decline was largely due to negative operating leverage partially...

Domestic tractor industry is continuing to be at the forefront of post-Covid automotive recovery in India. Against overall auto industry's ~36% YoY fall in July retail volumes, tractor segment volumes rose 35%. M&M;, as market leader with dominant 41.2% domestic market share as of FY20, is also benefitting from present sector tailwinds. Rural income levels stay on a relatively firmer footing with cash flows healthy on the back of strong Rabi harvest, rise in crop MSPs, healthy water table levels. Moreover, amid ongoing normal monsoon progress (1% above LPA as of July 31), strong...

M&M;'s (MM) Q1FY21 revenues dropped 56% YoY to Rs 56bn, EBITDA declined 68% to Rs 5.7bn and PAT nosedived 96% to Rs 389mn.

Tractors market share declined 39.1% in 1QFY21 (v/s 41.2% in FY20) due to supply side Current demand is 50-60% of normal; however, a clearer picture would emerge over the next 3-4 months. However, MM's SUVs business is severely challenged, and we do not see any respite for the company in this category in The Tractors segment has been seeing volume recovery since Dec19, driven by improvement in farm-level indicators such as output prices, lower input prices, higher government spend in rural areas, and unusually strong water reservoir levels. We upgrade FY21/FY22E EPS by 9%/3% to reflect the volume upgrade in tractors and UVs, as well as the improving mix MM's recent outperformance, valuations are still at a substantial discount to its five-year average (which captures both pain points of deterioration in the UV market share and the subsidiaries' performance).

Besides listing out priority areas for the auto and FES businesses, it also explains future growth areas for farm mechanization and M&M; is focused on using the current crisis (in the form of substantial losses in global businesses) to reboot (streamline capital allocation policy and bring accountability), reinvent (realize the potential of few unlisted businesses) and reignite value creation for all its stakeholders. M&M; is continuing its focus on farm mechanization to address concerns of farm productivity and labor shortage. aims to provide an integrated agronomy advisory, mechanized services and high-tech digital solutions to small farmers to reduce their cost of cultivation, enhance productivity and improve farming outcomes. M&M; is also focusing on the shared logistics segment for both personal mobility as well as cargo logistics. It further expanded its presence in this segment by acquiring stake in (shared personal mobility).

M&M;'s (MM) FY20 annual report focuses on strengthening core business and Change in Estimates | Target | Reco tightening capital allocation based on renewed management focus on turning around its core/strategic subsidiaries. Losses at key auto/farm subsidiaries...

Q4FY20 consolidated revenue fell 25.7% to Rs. 20,182cr, while EBITDA margin shrank 270bps YoY to 12.0% on increased costs. Adj. PAT declined 37.9% YoY to Rs. 448cr. Company wrote down its investments in US-based electric 2-wheeler business GenZe and S. Korea based automaker SsangYong Motor Co. We expect recovery in upcoming quarters as markets open up. As a market leader in farm equipment business, M&M; should benefit from pickup in tractor sales in coming months. We maintain our HOLD rating...

Mahindra & Mahindra (M&M;) reported a healthy operational performance in Q4FY20. Standalone net sales at | 9,144 crore were down 35% YoY (automotive revenues down 46%, tractor revenues down 3%), with automotive segment ASPs at | 6.1 lakh/unit and tractors segment ASP at | 5.3 lakh/unit being positive surprises. Standalone EBITDA margins at 12.4% were down 100 bps QoQ, with 290 bps gross margin expansion being overshadowed by negative operating leverage. Consequent standalone loss at PAT level of | 2,500 crore tracked exceptional charge of | 2,800 crore for...

Positive tractor outlook & focus on capital allocation to drive performance Mahindra & Mahindra (M&M;) posted 4QFY20 adj PAT of Rs3.22bn, down 70.0% YoY and 28.2% below our estimate, mainly on account of higher depreciation and higher tax rate. It reported an exceptional loss of Rs35.78bn for the quarter towards provision for impairment of investments made in Ssangyong (SYMC) and GenZe. Net revenue of Rs90.05bn fell by ~35% YoY and was 2% above our estimate. Average selling price (ASP) for the Automotive segment grew by 1.8% YoY while Farm Equipment segment's ASP declined by 0.4% YoY. Net sales for the two segments declined by 46.1% YoY and 3.0% YoY, respectively. EBITDA margin stood at 13.6%, up 10bps YoY and 310bps above our estimate. This improvement was largely driven...