M & M — Q4 FY25 earnings call

The auto business delivered outstanding results with SUV volumes growing 20% YoY, exceeding the mid-to-high teens guidance provided a year earlier. Market share expanded 210 bps to 22.5%, maintaining the #2 position by volume despite premium pricing. Auto standalone PBIT margin reached 10% excluding BEV contract manufacturing impact (9.5% including). The Thar three-door maintained strong momentum without cannibalization from Thar Roxx, appealing to completely different segments. LCV business showed resilience with 4% volume growth against a -3% industry CAGR, gaining 5 percentage points of market share driven by Veero launch success particularly in South India (7-8 share points gained in South). FY26 growth optimism rests on Thar Roxx full-year impact (only 6 months in FY25), 3XO full 12 months, and strong export traction in South Africa and Australia. Capacity expansions include Thar to 10,500-11,000/month and 3XO to ~11,000/month. A new platform to be revealed on August 15 with products from 2027, plus a Greenfield plant planned for FY28+. Management expects to outperform market growth in FY26 similar to FY25.

M&M's EV foray through MEAL achieved a milestone of EBITDA positivity at ₹10 crore in its first operational quarter without any PLI accrual. End-to-end EV EBITDA (including M&M contract manufacturing margin) was ₹22 crore, though PBIT was negative ₹166 crore due to depreciation. 6,300 vehicles were delivered in the first 40 days. The company became #1 electric SUV and #1 electric PV by revenue share in Q4. Current booking mix is heavily skewed to Pack 3 (>75%), which is favorable for margins but unsustainable for volume growth. Management identified a key insight: customers across packs want the 79kWh battery for range, contrary to initial assumptions of 79kWh only in top variants. Re-varianting is underway. Production capacity of 5,000/month operationalized with mix shifting to 60:40 (9E:BE6) by Jun-Jul. A significant operational learning was that EV deliveries are far more complex than ICE, requiring minimum 2-3 hours per delivery for app installations, charger coordination, and customer education. Management deliberately slowed deliveries to protect customer experience. ICE cannibalization is surprisingly low with many EV buyers being non-Mahindra owners. PLI certification expected Q2 FY26 with cumulative accrual; management described potential benefit as 'meaningful' but declined to quantify. Five-star Bharat NCAP rating achieved.

Farm tractor market share reached an all-time high of 43.3%, up 170 bps YoY, with Q4 being the best quarter for market share. Farm margins expanded 210 bps to 18.4% for FY25, with Q4 core tractor margin reaching an impressive 20.8% with no one-time^📎 benefits. Farm consolidated PBIT grew 25% in Q4 and 14% for FY25. Market share gains were driven by multiple initiatives: OJA and Target products filling the sub-30HP gap (adding 5 share points), Swaraj brand relaunch with MS Dhoni as authentic brand ambassador, YUVO brand repositioning for affordability. Hemant Sikka emphasized these are multiple small improvements not easily copyable by competition. Farm machinery crossed the ₹1,000 crore milestone, making M&M the second-largest farm machinery player in India. Management cautioned that higher competitive intensity is expected in the upcoming season which could require pricing responses. Industry growth for FY26 expected at high single digits with South and Maharashtra favorable. International farm operations saw mixed results: Turkey profitable despite 26% industry decline but lost share due to early TREM 5 transition; Brazil profitable with 8.5% market share in competitive market; US losses due to industry downcycle and OJA marketing spend but sub-20HP market share jumped from 3% to 10%. Three strategic international subs had aggregate ₹104 crore loss.

M&M took ₹654 crore impairment in standalone on Category B businesses MAM-Mitsubishi (Japan) and Sampo (Finland). These businesses provided significant strategic value (OJA platform from MAM, harvester technology from Sampo) but lacked profit trajectory. MAM Japan faces multi-year domestic market decline and loss of US export volumes as products shifted to India manufacturing. Sampo was impacted by complete cessation of Russia business post-Ukraine war and oil price-driven weakness in Algeria harvester market. The standalone-to-consolidated impairment walk: ₹654 crore standalone reduces to ₹156 crore consolidated because subsidiary losses already absorbed in consolidated books over time^⏳. Sampo write-downs are complete; MAM Japan streamlining will take a few more quarters. Management is pivoting these businesses to eliminate profit drain.

Mahindra Finance achieved a transformational milestone with standalone PAT exceeding ₹2,000 crore for the first time (₹2,300+ crore, up 33%). GS3 improved to below 4% versus 4.5% target, down from historical 7-8% average. AUM grew 17% with deliberate disbursement slowdown to focus on asset quality and controls. Rural Housing Finance required cleanup impacting consolidated results (up 16%). Tech Mahindra showed strong momentum with PAT up 80%+ YoY, good deal wins in consumer and BFSI, strong Europe/APAC performance, and continued margin expansion path. Growth gems framework refined into 'scalable' ($2-3B valuation target by FY30) and 'emerging' ($1B target by FY30). Hospitality grew room inventory from 3,700 to 5,800 targeting 2-3x in 5 years. Real Estate targeting ₹10,000 crore presales (from ₹670 crore) with 70-80% land acquired. Susten on track for 5x growth before FY30. LMM achieved 5x growth (14,000 to 78,000 vehicles), revenue ₹3,000+ crore and profitable, with 40%+ market share. Trucks and Buses (SML acquisition) met all four M&A criteria. Accelo positioned as next scalable gem with strong operational metrics. Aerostructures won recognition from top global aircraft OEMs.

FY25 cash generation was approximately ₹10,000 crore at M&M standalone level, reflecting strong operating results translating to cash. Total cash position (M&M + MEAL + LMM) reached ₹28,000 crore. ROE maintained at 18% despite building significant cash reserves. Management expects strong cash generation to continue in FY26. Capital deployment includes SML acquisition, rights issues for subsidiary companies, growth gem investments, and capacity expansion. The EPS CAGR since FY21 commitment stands at 63% annualized versus the 15-20% target, though management explicitly cautioned against extrapolating this rate forward. The four-year track record from the May 2021 commitment (ROE from 4% to 18%, EPS from ₹16.21 with 63% CAGR) demonstrates sustained execution quality.