Mahindra & Mahindra 144A

Hi, good afternoon everyone. We are a couple of minutes past, so we'll start now. And let me just take you through the highlights of the quarter, then we'll have Rajesh come in and talk about the auto and farm businesses, and Manoj will talk a little more about the financials. Overall, a very solid operating performance, excluding TechM. You've seen the TechM results, it's getting on a path for recovery and a turnaround now, but there's more work to be done, obviously a lot more work there. But besides that, auto continues on a very strong momentum, gaining market share in SUV, up at 21% now from a revenue standpoint, number one in market share, and at 49.6% in LCV. So very strong performance on both of those fronts. Farm While the industry has been tough and we expect it to be down 5-6% for this year, the business has actually gained 80 basis points of market share. And at the level that we are at, at above 40%, that again is something that is a very strong performance by the farm team. Mahindra Finance turnaround is very much on track. GS3 is at an all-time low of 4%. You've seen the results from Mahindra Finance that were published. The credit costs are on track in terms of what has been committed. Strong disbursement growth, sequential NIMs are up. So overall, the business is on a very solid track. And TechM is the sore spot for this quarter. Profit is down 61% due to a number of factors which were discussed in the TechM call. But it's one where with the new CEO coming in, we are seeing very good signs of a turnaround. A number of things have been put in place already. So we shall expect much better results from TechM as we go forward. In addition, our Growth Gem value unlock continues. We've launched... India's largest renewables INVIT and that puts Susten in great shape to be able to deliver the growth that we want. We've got a large number of investors and we had to say no to many of them as well. But as the business grows, we have the INVIT to be able to fund a large part of that growth in terms of the strategy we've outlined. Susten has performed very well this year. It's in fact much higher than the track we had outlined for it. We had talked about a 5x growth in Susten in five years. We are now looking at that and saying, should that be 10x or should that be somewhere in between 5 and 10? Second, from our last month mobility standpoint, we've got a second investment. The first was IFC, the second is NIIF's India-Japan fund, and this comes in at a valuation of 6600 crore, 10% higher than the first one. Again, driven by strong performance in the business. As a result, overall consolidated PAT is up 34%. This does exclude two items from last year. One was the sustained gain that we had as a one time when Ontario teachers came in and took the 30% stake and the entire company was revalued. And second is the trucks and buses impairment that was taken last year in the third quarter as well. So you see it on this slide here where revenue is up 15% for the quarter, 17% year to date. And from a PRT standpoint, you see the net impact of the two offsetting parts, the plus that we had last year from the sustained gain and the negative that we had last year from the trucks and buses impairment on a net basis was a gain of 693. Without that, it's up 34%. On a year-to-date basis, up 33%. We've talked about the three elements of a strategy. Capitalizing on market leadership in auto and farm. And you see that in the numbers here beyond market share. As we look at the profit increases up 49% despite the slowdown in the farm industry. That's driven by market share, margin performance in auto. And it's also setting the business up for the future with brand investments as well as product launches that have been done in farm that will be done in auto for EVs. TechM and Mahindra Finance, we talked earlier, Mahindra Finance is on a good track now. TechM has to get on that track and start its turnaround journey. And Growth Gems, while you see the numbers here, profits are up 3.3 times, but I'm a little less focused on these numbers, more focused on the value creation from the Growth Gems that we will see. And we again talked about LMM and Invit. Life Spaces, I'd highlight, is doing on a very strong track in terms of sales and on a 5x growth path that we've set for it. So on balance, we've got our strategy working as we had planned it. And therefore... We go back to the commitments we made, 18% ROE, we stay firm with that. We are 19% year-to-date. And from an EPS standpoint, we are a 40% CAGR over the last two years. We've taken away the F21 number. Obviously, it will be a lot higher if we include that, but that was a low number, so we haven't included that in the EPS growth that we see here. With that, let me invite Rajesh for comments on auto and farm.

Good afternoon, good evening, good morning, depending on where you are. Quickly walk you through the automotive business first. And as you see in the auto, we had a volume growth of 20%. The SUV part of it was close to 30%, which is 211,000. And the revenue market share is at number one position for the quarter and YTD April to September. And the quarter number is out there, 21%. LCV continues to be strong and our LCV market share less than 3.5 tons is at 49.6%. We got the automaker of the year or manufacturer of the year as they call it at the Auto Car Awards, a reflection of the multiple things that have happened in the auto business. On the left side you see a chart which has the SUV volume growth and we have been able to be number 2 on volume in a category in which most of our products are priced much higher than competition and for 6 quarters in a row. You know many of you have this question why are we not playing in the low end of the market. We strongly believe that we should play where our strengths are and our strengths allow us to be number 2 on volumes. even in a very competitive category, which the SUV market today is. And of course, we are number one on revenue market share, given our price per unit is much higher than everyone else. I guess this is the slide you all want a little bit more on. I'll talk a little on it now, but we'll take questions on it. So 226,000 booking numbers have come down. On one hand, that's good news because we wanted to bring down waiting periods. That is what the whole ramp up was meant to be. So part of it is that. Part of it is December does see a higher cancellation rate. So what you're seeing here is a 10% cancellation rate for the quarter. That is partly spiked by December, which is the wins changeover number. The January cancellation rate is back to less than 8%. So what are the things that have happened? And we can take more of this in the Q&A. So firstly, new bookings continue to be healthy at 50,000 odd per month. The daily supply average has gone up to 40,000. So obviously your bookings are going to come down as your availability has moved up from the past from 32,000 a month to 40,000 a month. So you are correcting the bookings by improved delivery. Cancellations did go up and like I said part of it is due to the win number. So on an overall basis, we would expect the bookings to be in this range. But the endeavor is to bring bookings down. Because if you really have to grow the business, it's not going to be easy to grow a business when a customer walks in and they hear that you're going to get the product after 10 months or 12 months or 8 months. That is not the nature of the market today. It may have been the nature of the market two years back, but it's not the nature of the market today. If we have to grow, we have to bring the booking numbers down. So my input to all of you is, it's not good news to have a good booking number. It's good news to have growth. So we want to be focused on bringing down this booking number. uh with a period of time and we can talk more on this in the q a i'm sure this is the top of mind question for all of you uh where are we on capacity expansion we had said we'll be at 49 000 capacity end of uh this financial year that's end of this quarter we are on track for that however we don't expect to hit that number in the near future for two key reasons one We are ramping down the 300 and as you see that we are in a mid-cycle refresh which is going to happen soon. So for the next two to three months, we will see a significantly lower volume of XUV300 which is one of our large selling products. So we are not going to see the spike in volume coming out of capacity. The second is there is a variability between demand and specific models that we have. So there will be some capacity mismatch. So what we've done is to give you an idea of what's going to happen next year. We've basically taken the SIAM projections for the industry, which is passenger vehicles at 3% to 4%, UV at 10% to 12%, and saying we will grow faster than that in mid to high teens. So that's in a way an expectation of where you should see us next year. And we can talk again more on that as we go. The LCV industry has by and large been flat through the year, a little negative in fact, but we've, as you can see, gained a very good market share and got growths out of the ability to grow market share with a very refreshed or in actually all new pickup portfolio, which has really helped us penetrate and gain share. The last mile mobility, we just put this up. We have a wide and very strong product portfolio, many more new products in the pipeline. a lot of work happening on product development in this space, there is increasing competition and that's good news because the penetration of the L5 segment as we know it to be is only 11% still. the ability to grow and penetrate this segment is going to happen with more competition. And we believe that is good because this is the segment out of all the automotive segments which has the best possibility for category penetration. And that will happen when more people come in and together drive growth. So, we feel good about the fact that the industry will grow. Obviously, there will be some loss of market share. That's not significant at this point of time. And again, we can take more questions on that if you have. The volumes in this segment in quarter three were 11,600, where we grew 118%. In January, we grew 69%. The market share in this segment was 48.5 in Q3. It's back to 60% plus in January. So there are series of things happening and again the message is huge upside on category growth which will allow us to drive a strong growth in the segment. The consolidated numbers for auto revenue was up 26%, PBIT was up 91% without considering the impact of trucks and buses impairment which was happened in last quarter. If we take that then it was minus 95 for PBIT but we are leaving that out of the equation. Margins, favorite topic which all of you have questions on. So in quarter 3 of F22, we had said we will go up by 3% in something we vaguely call the medium term. But that happened in one year, which is quarter 3 of F23. And in quarter 3 of F24, it's up by another 1.7%. So we have basically moved from 3.3 to 8.3 over this two year period. On FES, we all know the industry is down 4.9% in the quarter and about 4% for the year. In the quarter, we were down 4%. On YTD, we are down 2%. And we've gained 80 basis points of market share in the quarter. The rural economy is not having the best of time. but there are positives and negatives. So one key driver of rural economy is government spending index, an internal index we've created which looks at all the spending that happens in rural. It's not just Agri, it is all the spending that governments do in rural. We can see that curve moving up a little bit and hopefully that for us is a good indicator when you start seeing buoyancy and you can see the downward curve which is the time we've started seeing rural not as buoyant. The positive, of course, all of you know the rainfall delay, shortfall, reservoir levels, all of that. The positive news is terms of trade are becoming positive. Output inflation is 6%, input inflation is 3%. So there is 3% positive terms of trade, which is normally we've seen a very good sign of farmer sentiment. So that's one very positive news on the rural side right now. This is the market share trend just for you to see. Farm machinery is continuing to grow at 29% in spite of rural being slow. We had said we would feel good if we end this year at 40%. We may not get to 40% this year, but we feel we are on the right track at 30% plus. And as we see signs of rural economy pick up, we'll probably see much greater growth in this segment coming in. Revenue was flat. This is consolidated and PBIT was down 9% in the tractor segment. On core tractor margin, basically we were at 16.9. We had called out World Cup. It said we have got a World Cup spend in quarter 3. We have not taken the impact of that on auto side. Of course, auto spend as well. So we have not called that out as a percentage impact on auto margins. But because it has a significant impact on tractors, we've called that out. So that's a 0.7% impact in the quarter of what we spend on World Cup advertising. So if we had not done that, we would have probably been at 16.9% plus 0.7%, which we believe is a good core tractor margin in the current context. So you see the same thing on this graph, which is something that we've been showing for a period of time, which is industry growth mapped with our margin. And basically saying that our margins operate in a very narrow band of 17 to 19% typically, irrespective of what happens to industry in that quarter. And you can see that if it was 16.9 plus 0.7, then we are in that 17 and a half kind of band, even though we've seen industry down at minus 5.6 and minus 4.9 in this period of time. So with that, I'll hand over to Manoj. Thank you. Manoj.

Thank you, Rajesh. Good evening, everyone. So I just have two short slides, and I think this one Anish has covered largely in terms of the PAT. I think I just want to highlight two things. One is from a revenue perspective, while Otto and Farm Rajesh did cover, but financial services saw very good growth, about 24%, with Axelo growing about 21%. So multiple businesses are doing well from... from a perspective of contributing to the consolidated results. I think on the sustain and trucks, the 693 was an impact in the last quarter. To look at the MTBD business, I think we had looked at, performed a critical review and taken the charge last year. And that's an extraordinary item, was classified as extraordinary. But for purposes of comparison, the 34% is probably a more accurate number to look at. I think just another cut in terms of what is the journey from 1984 which is the number which is excluding susten as well as excluding the trucks and buses impairment. I think clearly auto is the significant addition in terms of 721 crores of profits. Farm, as Rajesh mentioned, was slightly down, including I think there's an impact of the World Cup there. And if I look at services, two things. First is TechM. I think there has been a drop in profitability and that's something we are working towards in terms of how do we get back on the journey of profit improvement. On Mahindra Finance, while the number looks down, I think last year we had the benefit of some of the credit cost reversals coming through, which is absent this time. But otherwise, the business continues to do very well with the focus on credit costs and and were much in line with whatever they had committed from a year-end perspective. And overall growth gems, I think there's a small increase. I think the 147 is also there was some Forex charge in the previous quarter, which is no longer there, a Forex loss. So I think that's a quick journey from 1984 to 2658. With that, I think we'll leave more time for questions because I think we don't have... too many other events happening like some of the past quarters. So I thought we'll engage in more discussions. Thank you so much.