M&M - Mahindra & Mahindra Ltd. Share Price

Mahindra & Mahindra Limited's management provided an optimistic outlook during the Q3 FY26 earnings call, highlighting strong financial performance across various business segments. Key highlights include:

1. Financial Performance: The company's operating PAT grew by 66%, while reported PAT increased by 47%. Notably, there was robust volume growth of 23% in both the Auto and Farm segments, with margins improving by 90 basis points for Auto and 240 basis points for Farm.

2. Future Growth Initiatives: Mahindra Finance has shifted towards growth after three years of focusing on asset quality and controls. The company aims for faster growth and diversification, with Mahindra Finance's operating profit increasing by 97%.

3. Real Estate and Logistics: The Lifespaces segment reported profits up five times, driven by greater urgency and successful land acquisitions, while Logistics achieved profitability for the first time in 11 quarters, indicating strong execution under new management.

4. Operational Metrics: Consolidated revenue grew by 26%, with significant contributions from various sectors. The Auto segment alone reported SUV volumes rising by 26%, capturing a market share of 24%.

5. Market Trends: Outlook for the upcoming year suggests sustained growth in commercial vehicle segments driven by recent GST reductions, which improved viability for customers. The company also noted a strong demand for their new electric SUVs, with an average monthly sales expectation of 4,000 units.

6. Capacity Expansion Plans: For FY27, Mahindra plans to add between 6,000 to 8,000 units in total capacity by ramping up production across various models, including an increase in EV production capabilities.

Overall, the management is confident in their trajectory towards continuous growth and profitability while maintaining robust operational performance across segments, targeting an 8-10% real growth rate over the coming years, supported by favorable macroeconomic conditions and strategic investments.

Question from Kapil: "Your outlook for next year for each of the segments, LCVs, Tractors, and Autos. Also, is there an element of pent-up demand due to the recent GST cut?"

Answer from Rajesh Jejurikar: "While we will share our detailed outlook in May, it's clear the GST cut has a significant impact on commercial segments. It improves cost of ownership, likely increasing demand for LCVs, tractors, and autos, driven by better affordability. The impact wasn't just a temporary pent-up demand; it's fundamentally shifted dynamics, particularly in LCVs due to a delayed replacement cycle. By FY27, we anticipate sustained growth driven by these factors."

Question from Amarjyoti Barua: "What are your thoughts on the impact of commodity inflation on pricing power?"

Answer from Amarjyoti Barua: "Commodity inflation is indeed a challenge. We see higher prices across the board, especially in precious metals and iron-related products. Our hedging strategy has mitigated some impact, but it's dynamic. We anticipate a 1% price adjustment to address inflationary pressures while continuously monitoring the market and being cautious about immediate price hikes to maintain our pricing sweet spot."

Question from Chandramouli: "What are your thoughts on the government's emissions standards and their potential impact on EV targets?"

Answer from Rajesh Jejurikar: "Collaborating with the government on emissions standards is ongoing. The shift in target expectations is likely to be less stringent than anticipated, which may ease pressure on our 25% EV mix goal for FY28. However, growth in ICE will persist as we aim to maximize both ICE and EV opportunities without excessive focus on ratios."

Question from Raghu: "What is your global ambition in EVs, and how do you plan to increase margins in the automotive business?"

Answer from Rajesh Jejurikar: "Our approach to EVs is deliberate; we'll focus initially on right-hand drive markets like Australia and New Zealand before expanding to Europe. For margins, we prioritize volume growth, maintaining strong value propositions without excessive pricing. Balancing these elements has led to industry-leading margins despite competitive pricing, maximizing cost efficiencies and customer appeal."