Result-Analysis-Elite-Wealth
Result Analysis: Mahindra & Mahindra Ltd. Result Update Q2FY22

 

`Particulars (In ₹. Cr) Q2FY22 Q1FY22 Q2FY21 QoQ % YoY%
Revenue from Operation 13305.37 11762.78 11590.32 13.11% 14.80%
Other Income 1104.81 205.21 383.90 438.38% 187.79%
Total Income 14410.18 11967.99 11974.22 20.41% 20.34%
Material cost 10034.71 8799.20 7177.40 14.04% 39.81%
Other Expenses 2233.97 1961.94 3060.46 13.87% -27.01%
Material cost as percentage of Total Income 75.42% 74.81% 61.93% 0.82% 21.79%
EBITDA 1660.00 1632.00 2057.00 1.72% -19.30%
EBITDA Margin 12.48% 15.62% 17.75% -20.11% -29.70%
Profit After Tax 1431.73 855.61 161.75 67.33% 785.15%
PATM (%) 10.76% 7.27% 1.40% 47.93% 671.05%
Basic EPS (in Rs. ) 11.98 7.16 1.36 67.32% 780.88%
Geographical Revenue Q2FY22 Q1FY22 Q2FY21 QoQ % YoY%
Automotive 7917.11 6050.24 6356.54 30.86% 24.55%
Farm Equipment 4903.25 5318.57 4835.37 -7.81% 1.40%
Others 553.07 455.66 445.5 21.38% 24.15%

Result Highlight:·

Revenue from Operations stood at Rs.13305 crore as against Rs. 11590 crore in Q2FY21, 14.80% increase YoY, 13.11% increase QOQ.

·EBITDA reported at Rs 1660 crore as compared to Rs. 2057 crore in Q2FY21, 19.30% drop YoY

· Profit Before extraordinary Income stood at Rs 1687 crore as against Rs. 1311 crore in Q2FY21, 29% increase YoY.

· Profit after Tax came in at Rs. 1431 crore as against Rs. 161 crore in Q2FY21, 785% increase.

· Farm Equipment Sector (FES) Tractors Market Share at 40.1% up 1.9 % compared to Q2 FY2021.

·Rise in other Income is because of higher dividend received from subsidiaries.

·Farm Subsidiaries recorded 5th consecutive quarter of Positive PBIT; 2nd quarter over Rs. 100 crores

· Company has reported negative Cash flow from operating activity of Rs 48 crore.

· EV 3 wheelers volume with 68% market share up by 318% compared to Q2 FY2021.

· Total Vehicle sold in this quarter is 99334 units while total tractor volume came in at 88920 units.

· Debt Equity ratio came in at 0.22 times vs 0.32 times last year same quarter.

Management commentary: 

  • Anish Shah, Managing Director & CEO, M&M Ltd, said, “We have seen significant all around improvement in our performance this quarter. Our strong show in the Auto and Farm sectors was complemented well by the improved performance in the group companies. Our investments in digital platforms are doing well and present a meaningful opportunity to create and unlock value.”

  • Rajesh Jejurikar, Executive Director, M&M Ltd, said, “FES continued to deliver robust performance both in terms of market share and financial metrics despite steep commodity inflation. We had a blockbuster XUV7OO launch witnessing bookings of more than 70k. The demand for our other key automotive products also remains strong. With better availability of semi-conductors, we hope to maintain the volume growth momentum Q3 onwards. We are poised well to deliver very strong growth and returns through an exciting new product portfolio.“

  • Manoj Bhat, Group Chief Financial Officer, M&M Ltd, said, “Commodity prices have impacted our margins in both the Auto and Farm business, but our focus on cost management and optimization has helped mitigate some of the impact

  • XUV 7OO launch – an overwhelming response: 50,000 bookings in 3 hours, 70,000 plus to

  • Management has guided for ROC of 18% plus till FY

  • Management said that margin are compressed because of very high commodity cost and says that there blended margin is still best in class and expect commodity prices to cool off in

  • On EV front company is open to partnerships as they are looking for leadership position in EV segment.

  • M&M has plan to launch XUV 400 in FY 23 which is going to be Electric

  • M&M has plan to launch Scorpio in coming

  • Management said XUV700 and thar has very different customer compared to their earlier models as there is much more acceptance for these product in urban

  • Management said that there subsidiary M&M financial performance has also improved significantly and expect it to

  • Company expect rural economy to do well as crop output is good but the base of last year is very high from rural market so incremental performance is not going to be very

OUTLOOK:

M&M LTD reported a strong set of number in Q2 FY22 where revenue came in at ₹ 13305 crore registering a growth of 14.80% Y-o-Y, EBITDA saw a degrowth of 19.30% in this quarter compared to last year and profit increase by 8 times Y-o-Y, automobile segment saw a very healthy growth of 25%, margin came in at 12.5% which was lower than last year because of very high commodity cost, but when compared to its peers still best in class. Company has truly transformed from an rural company to urban semi urban company as its product are now gaining traction in urban market and has a very strong booking of both Thar and XUV 700, company has 68% market share in electric 3w and export market is also doing very good. Management has guided for an ROC of 18% by FY 2025, management is open for partnership in EV space and want to be market leader.

At the CMP of ₹892, M&M is trading at PE multiple of 19x. Valuing the company at 22x FY23E EPS, we recommend buy on M&M Ltd at CMP with the Target Price of ₹ 1150.

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