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Systematix Research Report
Mahindra and Mahindra Ltd.’s Q2 FY23 operating performance was in line with consensus and our estimates with strong growth in both auto and farm segment continued.
Auto Ebit margin came in at 6.1% (up 350 basis points YoY) and tractor Ebit margin came in at 16.4% (down 230 bps YoY). New launches in the SUV segment have been received well, and the order book (six-12 months) is well diversified across XUV 700, Scorpio N and Thar.
M&M has announced over 50% increase in capacity over the next 18 months as order booking remains strong. The company has launched XUV400 (electric-passenger vehicle) with deliveries to begin from Q4.
In farm segment, the company expects a mid-single-digit growth in FY23 on normal monsoon and healthy reservoir levels. Benefits from cooling off in the commodity costs should flow in from H2 FY23.
We believe M&M should be able to retain majority of the raw material softening over the next six-12 months, given its strong product portfolio; we have thus built in 12.4%/13.5% Ebitda margin for FY23/24E, respectively.
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