M & M — Q1 FY25 earnings call

M&M maintained its #1 position in SUVs with volume growth of 24% YoY in Q1 FY25, driven by strong traction in XUV 3XO and sustained demand for Scorpio N. SUV market share expanded 130 bps. Capacity has increased 3x in the last 4 years to 49,000 units/month, enabling management to gradually eliminate long waiting periods. The XUV 3XO attracted 25% first-time buyers and 20-25% hatchback upgraders, indicating successful segment expansion. Management reiterated mid-to-high teens growth guidance for FY25 with confidence.

M&M took a deliberate pricing action on XUV700, introducing AX5 Select below ₹20 lakh and running a 'third anniversary promotion' on higher variants. The price had increased ₹3.8-4 lakhs since launch due to commodity and chip premiums. Management argued this was essential as on-road prices crossing ₹30 lakh were becoming a barrier for volume growth beyond 6,000 units/month. Capacity has scaled from 3,500 to 10,000 monthly. XUV700 bookings surged 40-45% in July versus the prior month. Management claims negligible financial impact due to chip cost normalization, value engineering, and operating leverage.

The farm equipment segment delivered 19.7% core tractor margin, reaching the long-targeted 19-20% band. Domestic market share hit 44.7% (seasonally higher in Q1). Volume grew 5% on market share gains despite a flat-to-slightly declining market. Multiple green shoots emerged: improving terms of trade for farmers, good July monsoons especially in previously drought-hit West and South regions, and increased government rural spending. Management maintained 5% industry growth guidance but indicated upside bias. Farm machinery revenue grew 34% to ₹265 crores.

Management built significant anticipation for the Thar 5-door (Roxx) launch scheduled for August 15, 2024, describing it as opening up a 'pretty wide' new segment versus the lifestyle-limited 3-door. The current Thar 3-door faces some demand moderation as prospects adopt a wait-and-watch approach. Management acknowledged uncertainty on the cannibalization between 3-door and 5-door variants but expects total franchise volume to increase. Billings have been temporarily moderated to manage dealer inventory during this transition.

Mahindra Finance delivered PAT of ₹497 crores, up 37% YoY, with assets growing 23%. GNPA marginally increased to 3.6% from 3.4% (typical Q1 seasonality). Technology transformation reached a milestone with 100% branches under central processing. Management framed this as validation of the 3-year turnaround strategy initiated ~21 months ago. Anish Shah emphasized this business is 'finally unlocking its potential' after years of underperformance.

M&M's truck business reached cash breakeven with 3.9% market share in its addressable 80% of the market (up from 2.5% three years ago, targeting return to 5% and eventually 7-8%). At 7-8% share, management sees this as a ₹10,000 crore revenue opportunity versus current ~₹3,500 crores. The ICV portfolio is now well-established, and the profit pool in the industry is strong. However, Q1 was distorted as the 20% segment where M&M doesn't play saw 50-60% growth while M&M's addressable 80% saw -1% decline.

EV three-wheeler penetration reached ~20% in Q1, with management projecting 100% by 2030 when subsidies won't be needed. The MEAL (electric SUV) subsidiary is valued at up to $9 billion with investments from BII and Temasek, with valuation conversion linked to 2027 milestones. The last-mile mobility subsidiary is valued at ₹6,000+ crores with IFC and NIF Japan investments of ~₹1,000 crores. BEV margins will be reported separately from ICE. Management deflected specific EV pricing questions to 2025, maintaining that per-unit margins will match ICE equivalents at steady state.