Auto business

  • In the SUV business, it has over 160k bookings, with XUV700 leading the way with ~70k bookings.
  • Semiconductor shortage led to a loss of 32k units in 2QFY22. While the availability of semiconductors is improving, the situation is dynamic, with visibility only till Dec’21.
  • In the Auto business, it is targeting to be numero uno in the core SUV segment (which is currently 70% of the UV market) by focusing on the authentic SUV portfolio and four core brands (and maybe a new brand for EVs). It plans to launch 13 new SUVs by FY27, including eight new electric SUVs. It is targeting 20% of FY27 volumes from EVs.
  • In the LCV business, the management is focusing on consolidating its rank one position in the sub-3.5t LCV segment. It plans to launch 17 new LCVs by FY26, including eight e-LCVs. It also plans to offer CNG options in 12 LCVs. It would launch a new Pick-up range next year as well as a new platform in the sub-2t segment to address its weakness in this segment.
  • In 3Ws, it expects over 30% penetration by EVs by FY25. It currently has a 68% market share. The management aims to launch five new 3Ws and increase its sales and service reach.
  • Aggressive pricing for new products: Despite being launched at an attractive price, XUV700 enjoyed a positive contribution margin, which has improved with subsequent price increases. It will continue to aggressively price its new product and then increase prices after the product gets established.
  • Thar capacity is currently at 4k units/month (v/s 2-2.5k/month at its launch). MM is investing to increase it substantially. It would divulge its XUV700 capacity subsequently.

Tractor/FES business

  • Delayed monsoon and harvesting has resulted in a deferment of demand to post-Diwali. Hence, analyzing Diwali sales for Tractors would not offer a correct picture. The management maintained its FY22 guidance of flat to single-digit growth for the Tractor industry. As all Agri indicators are positive, it expects rural buoyancy to return (though a high base will still be a factor).
  • MM already started channel inventory destocking from Oct'21 and expects to correct it by Jan’22.
  • It plans to launch four Tractor platforms and 37 new models on it by FY26.
  • In the Farm Machinery business, it is targeting to grow its FY27 revenue by 10x to ~INR50b (including ~INR10b from exports), led by: a) strong growth in the domestic industry (to ~INR120b by FY27 from INR50b currently), and b) driving market share gains to over 30% from sub-10% currently. MM plans to gain market share through a) launch of 15 new products by FY25, b) enabling access to customers through finance, lease, and rentals, and c) 3x expansion in dealers by FY25. It will have to innovate at multiple levels, viz: a) products customized at a hyper-local level, b) logistics/localized production facilities, and c) access to product/finance.

Other takeaways

  • EVs: It is open to partnerships and external investors. It is currently consolidating its EV business by merging Mahindra Electric (100% subsidiary) with the standalone entity, bringing the entire EV business under one roof. It plans to have a sizeable share in e-3Ws, e-LCVs, and e-PVs. It is well-positioned on the e-3W front but needs to demonstrate capabilities in e-PVs. It plans to launch an e-XUV400 in 4QFY23 in India. e-KUV will be primarily for export to North Africa and SAARC countries.
  • Farm subsidiaries recorded the fifth consecutive quarter of positive PBIT, with the second quarter of more than INR1b PBIT. Auto subsidiaries have also turned PBIT positive at INR70m (v/s an INR240m loss in 2QFY21). Adjusted PAT for international subsidiaries (excluding SYMC) stood at INR10m v/s a loss of INR1.99b in 2QFY21.
  • Porter, one of its digital platforms for Logistics, was valued at INR37.5b after an external funding round of INR7.5b. MM has 25-30% stake.
  • It is targeting cost reduction of 3pp by: a) reducing product cost through platform configurability, parts commonality, and material cost reduction, and b) reducing fixed cost through new-age marketing, manufacturing, logistics, and manpower productivity.


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