Mahindra & Mahindra 144A

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Good afternoon, everyone, and a very warm welcome to the quarter two analyst meet of Mahindra and Mahindra Limited. We have with us today our group CEO and MD, Dr. Anish Shah, ED and CEO of our auto and farm business, Mr. Rajesh J. Jodhikar, and our group CFO, Mr. Amarjyoti Barua. Once the presentation concludes, we will commence the Q&A session. Just as a reminder, this meeting is being recorded. For the purpose of completeness, I do wish to read this out. Just next slide. Just next slide, please. Thank you. Certain statements in this meeting with regard to our future growth prospects are forward-looking statements which involve a number of risks and uncertainties that could cause actual results to be materially different from those in such forward-looking statements. With that, I now hand over to Dr. Shah for his opening remarks.

Good afternoon, everyone. Good evening to folks who are joining online, or good morning as well. Before we start the presentation, I'd just like to say that this is one quarter where We've seen all our businesses come together. While we've always driven consistent operating performance, we've always had something not moving exactly as it needed to. But this is one time when we're starting to see everything move in the right direction. So very glad to start with that. Auto and farm with a very strong operating performance. Auto revenue market share is at 21.9%, up almost two percentage points versus last year. PBIT margin up significantly as well at 140 basis points versus the prior same quarter. Farm market share up almost one percentage point, fairly significant given that we are in the low 40s in terms of market share. And there again, margins up 150 basis points versus the same quarter last year. Services, an area that we have talked about a lot, has seen an 80% growth in profit after tax. That's driven by TechM, Mahindra Finance and our other growth gems. TechM has seen traction in BFSI. EBIT is up almost five percentage points, yes, from a low base. And there is more to do on that front. So we continue to drive margin expansion in TechMahindra. Mahendra Finance, while there's been a lot of commentary on it, this is a business that continues on the right track from a turnaround standpoint. Asset quality has been the most important thing. In fact, in 22, we had talked about getting to GS3 of less than 6%. We are less than 4% and continue to be. It's at 3.8 right now. We will see some variation between 3.6, 3.8, 4 in that sense. But that's part of the business itself. And the key is that is a very significant change in business model in terms of leaving out certain segments that contributed to higher volatility and getting to a much more stable ways. In addition to that, asset under management are up 20%. PAT is up 36%, actually, not 57% in this case. And GS3 is within range at 3.8%, with end losses down to about a percent or so. So overall, on a fairly strong trajectory, I'll talk about that a little more. Resulting in a consolidated PAT of 35% higher than where we were last year, same quarter, 3,171 crores. And ROE, we maintain 18% and we are at 18.9 in terms of this quarter. As you look at the numbers, revenue close to 38,000 crores, up 10%. Profit after tax up 35%, as I mentioned. That does include gain in terms of sale of land, which is not an operating income. And if you exclude that, it's up 22% from the same quarter last year. Key drivers on the consolidated pet, auto and farm up 23%. I talked about margins, market share. In addition, Rajesh will talk about the new launches and the success that we've seen there. Tech Mahindra, what you see here is a significant growth versus last year's same quarter. As I mentioned, last year's same quarter was muted. It had come down. And therefore, we're sort of getting back closer to where our normal would be and then go beyond that to increase the margin and close the gap further with our competitors. Mahindra Finance up 36%, Growth Gems. What you see here is a gain last year that included revaluation of TECO as Ontario teachers came in and took a stake in that. And excluding that revaluation gained last year, we are up 72% in terms of other Growth Gems. The growth gems, I will say that we are not as focused on the profit number every quarter. We are building these businesses for the long term. We want a 5x worth in these businesses long term. So we will see some volatility possibly in profit quarter to quarter. It's a good time for me to say it when we are up 72%, so I'm not saying it when we are down something. But that is something we keep in mind. We are building these for the long term, not for quarter to quarter profits at this point. The one thing I do want to mention on this page before I move forward is our renewables business, Susten, we had talked about five gigawatts in five years, so one gigawatt a year. In this last quarter, in one quarter alone, we got almost one gigawatt. And that's coming off two gigawatts last year. So this business is starting to move at a much faster pace than what we had planned for. Capitalizing on market leadership with auto and farm. I spoke earlier about a market share volumes up 18%, margins up. Capacity is at 54,000 now. We had talked about getting to 49 at the end of last year. We did. We had talked about getting to 54 now. We have. And we have spoken about adding capacity for electric, which is well underway in terms of plan and what we've said in line with it at this point in time. Farm, we're seeing an uptick in rural sentiment, and Rajesh, again, will talk about that. We are seeing some challenges in international businesses, and we'll talk more about that in the coming quarters, but a lot of it is driven by market outlook or what the market's been doing in the U.S., significantly downwards is where it has been, and hyperinflation in Turkey that we've seen, which does impact the accounting numbers. So we are... As we always do, and I'll preempt a question here, doing a detailed analysis of companies, especially under stress, does not mean we exit companies when they're under stress because many of these have a good, strong long-term potential and we've just got to work through that stress. We've got to make sure that we are certain that we can win. We are certain that we can get that long-term potential. And if at some point we feel we cannot in any company, then we will take action on it at that point in time. But we're not there as yet. Mind the finance, I will highlight the fact that disbursements were down 1% and that is something that we're really not concerned about because our focus has been on building the new model and growing the right way. Growth is there in this business in a significant manner. We tell the business, don't grow at all costs. Grow responsibly. And if that means slightly slower growth in a particular quarter, that's fine. But make sure that the asset quality stays strong. Make sure that we're doing everything from a technology and data standpoint that we said we will do. And more importantly, start the diversification process. That is one area we've been slower than what we have promised so far because we wanted to make sure controls were right And the business was set up well not to have surprises. And that's a process we are starting now with expansion into mortgage. And you will see more of that in the coming quarters. Tech Mahindra, from an industry standpoint, is seeing a mixed demand outlook, some positivity in certain areas. BFSI has been a good space for this business and something that has helped. help TechMinder diversify into new areas as well. And I talked about the focus on margins that we have here. In terms of three of our growth gems, logistics is starting to see some uptick in volume. It has been an industry that's seen somewhat muted volume for a few quarters and we're starting to see some of that come back. A lot of cost efficiency initiatives are underway and there is stronger execution that we are seeing. We still have some more work to do on that front with regard to the express business and the integration of Revigo, which has caused some of the profit impact in this business, but on balance, the business is in an industry with tremendous potential and has a very good set of customers, has a very good operating model and it's one that we feel very, very confident about. Hospitality is moving well. All parameters are looking good and we are exploring what are avenues for further expansion of this business and we'll come back once we've outlined some of those avenues. Real estate business is obviously operating in a very strong industry tailwind at this point in time and is doing very well, not just in terms of that tailwind, not just in terms of land acquisition, which you see on this page, but also in terms of profitability, in terms of executing very well on projects, delivering the profitability that we expect in those projects. And that's a significant change in terms of having this business move forward well and one that gives us more confidence around the the strength that we have in the business and the ability for it to grow further. So with that, the standard slide that I end with, which is a consistent delivery on commitments, we stay above 18% for ROE and on EPS growth as we look at F22 onwards, which is where we had made the commitment, we are at a 40% CAGR as we stand today. With that, let me invite Rajesh to take you through some of the details on the auto and farm businesses.