26 May 2023 11:45 AM GMT

Company Review

Top Indian Companies: Mahindra & Mahindra Limited

Myfin Desk

Top Indian Companies: Mahindra & Mahindra Limited


M&M is a Nifty50 company with a weightage of 1.09%.

Mahindra & Mahindra Limited (M&M) is an Indian multinational automotive manufacturing corporation headquartered in Mumbai.

Part of the Mahindra Group, M&M is one of the largest vehicle manufacturers by production in India. M&M is a Nifty50 company with a weightage of 1.09%.

Mahindra & Mahindra was founded as a steel trading company on 2 October 1945 in Ludhiana as Mahindra & Muhammad by brothers Kailash Chandra Mahindra and Jagdish Chandra Mahindra along with Malik Ghulam Muhammad (1895–1956).

Anand Mahindra, the present Chairman of Mahindra Group, is the grandson of Jagdish Chandra Mahindra.

In 1948, the company changed its name to Mahindra & Mahindra.

Soon, M&M was established as the Jeep manufacturer in India, later commenced manufacturing light commercial vehicles (LCVs) and agricultural tractors.

In 1999, Mahindra purchased 100% of Gujarat Tractors from the Government of Gujarat.

In 2007, M&M acquired Punjab Tractor Limited (PTL) making it the world's largest tractor manufacturer. Subsequent to this take-over, the former PTL was merged into M&M and transformed as Swaraj division of Mahindra & Mahindra in the year 2009.

Over the past few years, the company has taken interest in new industries and in foreign markets. In 2008, they entered the two-wheeler industry by taking over Kinetic Motors in India.[13]

In 2010, M&M took a 55% stake in the REVA Electric Car Company and in 2016, they renamed it Mahindra Electric Mobility Ltd after taking 100% ownership.

In 2011 Mahindra and Mahindra acquired South Korea's SsangYong Motor Company.

In October 2014, Mahindra and Mahindra acquired a 51% controlling stake in Peugeot Motocycles and progressed to acquire a 100% controlling stake in October 2019.

In May 2015 Mahindra acquired a 33.33% stake in Japanese tractor manufacturer Mitsubishi Agricultural Machinery (MAM),.

In March 2016, Mahindra acquired 35% in Finland-based Sampo Rosenlew, entering the combine harvester business, subsequently increasing its stake in the company to 49.04% in December 2019.

In January 2017, Mahindra and Mahindra Ltd acquired a 75.1 equity stake in Hisarlar Makina Sanayi ve Ticaret Anonym Şirketi (Hisarlar), a farm equipment company.

In November 2017, Mahindra signed a memorandum of understanding (MOU) agreement with Belgium-based Dewulf, a supplier of a full line of potato and root crop machinery.

In January 2018, Mahindra announced its foray into the sprayers business through the acquisition of a 26% equity stake in M.I.T.R.A. Agro Equipments Pvt Ltd, a Maharashtra-based AgTech company (MITRA).

Operations and products

Under the “Mahindra” brand name, the company produces SUVs, Multi utility vehicles, pickups, lightweight commercial vehicles, heavyweight commercial vehicles, two wheeled motorcycles and tractors. Mahindra maintains business relations with foreign companies like Renault SA, France.

Its automotive global subsidiaries include:

• Mahindra Europe S.r.l. based in Italy,[43]

• Mahindra Automotive North America (MANA) in US.,

• Automobili Pininfarina in Italy[44]

• Mahindra South Africa[45]

• Mahindra Australia

• Mahindra Brazil & Mexico

Shareholding Pattern

The Shareholding Pattern page of Mahindra & Mahindra Ltd. presents the Promoter's holding, FII's holding, DII's Holding, and Share holding by general public etc.

Holder's Name No of Shares % Share Holding

No of Shares 1243192544 100%

Promoters 234048774 18.83%

Foreign Institutions 466184543 37.5%

Banks Mutual Funds 149168581 12%

Central Govt 884264 0.07%

Others 16766084 1.35%

General Public 103213312 8.3%

Financial Institutions 186105827 14.97%

Foreign Promoter 758744 0.06%

GDR 86062415 6.92%

FY2023 Q4 and Full YearResults

Driven by robust performance across business verticals, Mahindra & Mahindra reported an 18 per cent jump in consolidated profit at Rs 2,637 crore for the March quarter and highest-ever annual profit of Rs 10,282 crore in FY23.

The Mumbai-based company had reported a profit after tax (PAT) of Rs 2,237 crore in the January-March quarter of 2021-22 fiscal.

Revenue increased to Rs 32,366 crore for the fourth quarter of FY23, as compared to Rs 25,934 crore in the year-ago period.

For the year ended March 31, 2023, the company posted a consolidated PAT of Rs 10,282 crore, up 56 per cent, from Rs 6,577 crore in FY22.

The company said the FY23 PAT is its highest-ever profit reported in a fiscal year.

Revenue rose to Rs 1,21,269 crore last fiscal, as against Rs 90,171 crore in 2021-22 fiscal, an increase of 34 per cent.

M&M said the automotive business led the way last fiscal with 62 per cent growth, driven by strong execution of launches and an improvement in supply chain related issues.

Besides, Mahindra Accelo grew by 37 per cent; Mahindra Logistics, by 24 per cent; and Club Mahindra by 22 per cent.

"It has been a blockbuster year for the group. Auto led the way with record-breaking launches, as we regained the #1 position for SUV revenue market share," M M Managing Director & CEO Anish Shah said.

Light commercial vehicles (LCVs), farm equipment, and electric three-wheelers continue to strengthen the company's leadership position, he added.

"We are very well positioned for the future, based on a strong presence in key industries, leadership in technology and a growth mindset, coupled with fiscal discipline," Shah said.

The company reported highest-ever automotive segment volumes of 6.98 lakh in FY23, up 50 per cent, from 4,65,601 units in FY22.

The vertical posted revenue of Rs 16,400 crore, up 35 per cent as compared to FY22.

M&M said it was the leading player in the SUV revenue market share with fourth quarter share at 19.6 per cent.

It noted that open bookings for its SUV range stood at 2.92 lakh units as on May 1, 2023, reflecting continued strong automotive demand.

The company also reported highest-ever volumes of 4.04 lakh units in the farm equipment segment in FY23.

Tractor sales stood at 4,03,981 units last fiscal, up 15 per cent, from 3,50,981 units in the 2021-22 fiscal.

M&M Executive Director & CEO (Auto and Farm Sector) Rajesh Jejurikar said the company remained excited about the market momentum in both the auto and farm equipment segments and about crossing the milestone of 1.1 million vehicles in FY23.

"The response to new products has been very good with exciting new launches planned over the next 12 months. The efforts on cost management have led to consistent margin improvement," he noted.

M&M noted that Tech Mahindra revenue rose 19 per cent with focus on margin transformation. Similarly, Mahindra & Mahindra Financial Services reported highest-ever disbursements with AUM up 27 per cent and GNPA improving to 4.5 per cent.

"Secular revenue growth across the group along with strong operating leverage has helped us cross the milestone of Rs 10,000 cr in profits. Our sharp focus on capital allocation, monetisation and innovative partnerships continues to unlock value," M&M Group CFO Manoj Bhat said.

The company said its board recommended a dividend of Rs 16.25 (325 per cent) per share of the face value of Rs 5 each.

Shares of the company closed 0.34 per cent up at Rs 1,281.85 apiece on the BSE.

Brokerage Outlook

Brokerage, Nomura, value M&M based on a SOTP methodology to arrive at our TP of INR1,160. It value the core M&M+ MVML business, based on a 8x target EV-EBITDA on FY24F EBITDA. Brokerage value its investments in other listed subsidiaries at INR364/share, at the current market price for listed subs and add INR 36 for key unlisted subs at book value. The benchmark index for this stock is the Nifty 50.

ESG and Sustainability

Mahindra & Mahindra aspires to lead ESG Globally and has well defined goals in every aspect of ESG framework On the environment side, it has a target of achieving carbon neutrality by 2040.

It achieved Total Scope 1 and Scope 2 GHG Emissions reduction of 11% y-y in FY21. It has also set targets to achieve 50% renewable energy usage by 2025 (current renewable share is at 5%) and eventually to 100% renewable energy usage, achieve 60% improvement in energy productivity by 2025 and 100% eventually,