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Mahindra & Mahindra Q4 Results: Profit zooms 4x: Should you stay invested?

Mahindra & Mahindra Q4 Results: Profit zooms 4x: Should you stay invested?

Mahindra & Mahindra Q4 Results

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Manufacturing everything from tractors to electric vehicles, the Indian multinational automotive manufacturing corporation, Mahindra and Mahindra posted great Q4 results this quarter.

Mahindra and Mahindra reported a 427% year-on-year (YoY) surge in its profit after tax (PAT) at ₹1,292 crores. Going forward, the company expects new launches to drive the growth.

Check out the Mahindra and Mahindra Q4 Results

Mahindra & Mahindra Q4 Results – New launches will drive the growth and retrieve pricing to aid margins

Mahindra & Mahindra Results


  • 🙂 Revenue, EBITDA, and margin were above our estimates.
  • 🙂 Standalone revenue stood at ₹17,124 crores, above our estimate of ₹16,763 crores registering a growth of 28% from Q4 FY22 and 12% over Q3 of FY 21.
  • 😀 The company reported a 427% surge in its PAT at ₹1,292 crores over a PAT of ₹245 crores in Q4 of FY 21.
  • 🙂 EBITDA stood at ₹1,945 crores, above our estimate of ₹1,847 crores, registering a growth of 7.8% over the last quarter, while a de-growth of 0.5%
  • 📈M&M reported the highest revenue for the Auto and Farm segment in FY22.
  • 🏅M&M became no.1 in SUV revenue market share in Q4 and H2 FY22: Overall 170k open bookings. XUV7OO leading the way with 78k plus open bookings.
  • 🙂 While Farm Equipment Sector (FES) gained 180 bps market share in FY22. With more than 170k bookings, the demand for the automotive product portfolio remains strong. FES delivered the second-highest full-year PBIT despite market slowdown and steep commodity inflation.
  • Farm Subsidiaries recorded the 7th consecutive quarter of positive PBIT.
  • One-time exceptional item of ₹124.79 crores for the quarter ended 31st March 2022 represents impairment provision for long-term investments, gain on sale of certain investments, and sale of certain freehold land. EPS stood at ₹10.8 in Q4FY22 against ₹11.3 in Q3FY22 (₹2.1 in Q4FY21).
  • The Board of Directors has recommended a final dividend for FY22 of ₹11.55 per share.


  • 🙁 On the margins front, the EBITDA margin contracted by 33bps from Q4 of last year (YoY) and 5bps from Q3 of this year(QoQ) to 11.4%, against our estimate of 11% backed by positive net income of price hike.
  • 🙁 The standalone PAT saw a decline of 4.5% over Q3’22 and was below our estimate of ₹1,451 crores.

New launches will drive the growth and retrieve pricing to aid margins

Given the recent fiscal and monetary measures by the Government of India and RBI, the company foresees the cost pressures in the economy to ease out.

We believe the tractor industry would continue to deliver single-digit growth momentum in 1st half of FY23 despite the supply-side issue, which is witnessed in Apr’22. However, we expect strong demand for SUVs to continue over the next 2-3 years and the premiumisation trend would further pick up. M&M has received strong bookings for Thar, XUV300, Bolero NEO and XUV700 taking overall bookings to 170K+, while XUV 700 alone has surpassed bookings of 78k+ with monthly bookings of 9.5k+. Moreover, it plans to launch 15 new products each in tractor and farm machinery space and 17 new products in LCVs with a few CNG options by 2026.

Analyst meet: key takeaways

  • Segment performance: M&M occupies a 40% market share in Farm Equipment Segment(FES) in FY 22. In LCV<3.5 T, its market share stood at 42.7% in FY 22. The Farm Equipment Segment subsidiaries of M&M reported a positive EBIT of ₹310 crores in FY 22. ROE guidance is 18% for the Auto and Farm (AFS) business, revenue growth guidance is 15-20% CAGR vs 20% growth in FY 22 and 10-15 EPS growth guidance by FY 25
  • Provision reversal: Mahindra & Mahindra Financial Services Limited (MMFSL)’s Q4 results indicated that 106 provisions were reversed with a net reversal of ₹144 crores in FY22. Disbursements were up 54% YoY during Q4 FY22. The company met its 70-80 provision reversal target in Q4 FY22.
  • Global footprint: the management indicated that exports to South Asia grew significantly for both the Auto and Farm segments. 🙂 M&M achieved the highest ever sales for South Africa, Brazil and Australia. It also launched XUV 300 in South Africa.
  • New launches: M&M expects strong volume from its new launch Scorpio N (Launch planned for Jun 22. M&M received strong bookings for Thar, XUV 300 Bolero NEO, Scorpio and XUV 700. The total open bookings stand at 1.7 lacs. All four consecutive blockbuster launches helped the company to regain the lost market share partially in the core SUV space. XUV 700 received a strong response with 78 k+bookings and monthly bookings of 95k+ with just 10-15 cancellations. The waiting period for XUV 700 currently stands at 18-24 months.
  • Capex: The company plans to spend a CAPEX of ₹11,900 crores for the auto segment (including EV) and ₹3,400 crores for the FES segment for the next 2 years Further it plans to invest ~₹1,500 crores towards the auto farm segment and ~₹2,700 crores towards group companies in a total of ₹17,000 crores CAPEX for FY 22-24.


The company has become a market leader in the electric 3-wheeler space with a 73% market share. It will launch its electric vehicle business strategy, ‘Born Electric Vision’ on Aug 22. The company has taken several initiatives in the past which help it meet its energy efficiency goals, it is also increasing its focus on the use of renewable energy. For the most part, the company is into the manufacturing of automobiles which involves emissions of CO2 in both manufacturing and use, but it is doing several investments to reduce its carbon footprint and help India’s growth into the EV space.

Outlook and valuation: should you buy or hold M&M?

Mahindra and Mahindra have reported a strong set of numbers in Q4 Results, backed by strong bookings for Thar, XUV300, Bolero NEO and XUV700 taking overall bookings to 170K+.  

Going ahead, In view of the robust products pipeline, sizable presence in the tractor segment and revival in agriculture, we value M&M at a PE of 16x to its FY 24 estimated EPS(Core)of ₹57.1, which yields a revised target price of ₹1,274 (earlier our target price was ₹1,077 per share).

Accordingly, we maintain a BUY rating on the stock.

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