Mahindra & Mahindra 144A

Good afternoon, everyone, and a very warm welcome to the quarter two analyst meet of Mahindra and Mahindra Limited. For the main presentation today, we have with us our group CEO and MD, Dr. Anish Shah, ED and CEO of Verato and Farm Business, Mr. Rajesh Jejorikar, and our group CFO, Mr. Amarjyoti Barua. Once the presentation concludes, we will start with the Q&A session. Just a reminder, this meeting is being recorded. For the purpose of completeness, I wish to read this out. 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 differ materially from such forward-looking statements. With that, I now hand over to Dr. Shah for opening remarks.

Thank you, Divya. Good afternoon, everyone. Just before this, at the press meet, I started by saying that I'm delighted to announce results for this quarter. And as many of you know me well through many, many quarters, I don't think you've heard the word delighted from me so far as yet. It's always been good, steady performance. We're doing well. We're on track. But this one is different because we've seen all our businesses come together and take decisions. in the challenges of the quarter. It wasn't an easy quarter overall. But despite that, I would give a lot of credit to our teams across businesses. And therefore, you also see a simplified version of our key messages page because sometimes when numbers say what they have to, you don't need to say much beyond that. And what you see is a strong performance across businesses with farm profits up 54%. With auto at 14%, but impacted by the GST transition because a number of vehicles were not delivered from September 8th onwards, or rather delivery was postponed to October. And 14% generally is a very good number, but in the context of our overall numbers, we feel that it could be higher. And that's again because of the transition. Mahindra Finance delivers. We've been talking about Mahindra Finance for some time and we'll give more details on that. But I look at this as sort of the end of phase one in terms of what we had to deliver for Mahindra Finance and a very strong quarter with 45% operating profit growth. TechM on track, profits up 35%. This does include exclusion of a one-off gain from land sale last year. And that is therefore an operating number of 35%. Growth gems are accelerating. As you heard before, I typically don't talk much about profits for growth gems because we are looking at investing in these businesses and growing them multiple. And therefore, we will look at profits for a few years down the road, not today. But despite that, we've got a good outcome for growth gems right now. And on balance, consolidated profit is up 28%. According for three one-offs, First is gain from land sale last year. Second is gain from PLI this year, what was recorded in this quarter but for prior quarters. And therefore, we've counted the prior quarters part obviously as a one-off and are not taking that gain into account. And third is the tax payment on SML Isuzu transaction of about 217 crores. So those are the three that we've taken out. And therefore, we want to show the operating profit numbers, which is up 28%. ROE annualized is up 19% with my standard caveat which is please do not expect 19% going forward. It will always be in the range of 18% and could be slightly higher or below that. Consolidated numbers, revenue up 22%. Year-over-year, year-to-date up 22% as well, so it's not just a quarter. It is performance for the year. Profit operating up 28% for the quarter, 29% year-to-date. And therefore, I want to go back to the reason for the word delighted is this time we've got all our businesses really contributing in a very meaningful way. It's not just the numbers, it's the quality of the numbers behind all our businesses contributing that delivers that outcome. Drivers of consolidated pet, auto and farm up 28%. Tractor volume strong at 32%. Auto volume, given the transition, a little lower at 13%. You'll see a steady margin expansion, completion of the SML acquisition. And that has driven, again, a very strong outcome for the auto and farm businesses. TechM and Mindre Finance, both businesses that are on a track to meet peer averages and then over time exceed peer averages. I think Mindre Finance has completed that first phase as I mentioned. And what you see here again is great results for both businesses. growth gems where we've got a 5x growth challenge what you see is 22% increase a one-off here which is not a one-off we captured in overall numbers there was a one-time tax impact which we've just basically shown for the growth gems only and because overall numbers are smaller but real estate is strong aero has continued strong winds the Airbus helicopter fuselage that we will supply globally is a big win for the other structures business and And Exelo has continued growth momentum. Auto, a little more details on the auto business. Revenue of 25% as you've heard from us before. There will be a mismatch between revenue and profit growth for a few reasons and Rajesh will cover that in more detail as well. SEV penetration from an electric standpoint is 8.7%, up 90 basis points, sequentially quarter on quarter, and export momentum is strong. This is a growth vector for us, and we are seeing a 40% growth in exports, and hopefully we continue to see that be a meaningful growth vector as we go forward. Market share, this is a remarkable number, up 390 basis points from a revenue standpoint, year over year for the same quarter, literally 4 percentage points of market share gain. LCV market share, despite it being 50% plus, has increased as well by 100 basis points to 53.2%. And that has resulted in the profit numbers that we've talked about. Farm, just outstanding execution on the ground. Premium segment growth, albeit from a small base. Operational execution driving both profits and cash. You'll see the cash numbers a little later as Amar presents them. And we've completed the sale of Sampo in Finland. We continue to maintain that discipline. And what we've always said is where we need to exit a business, we will. And this is what we've done. with SEMPO and market share up 50 basis points. Farm revenue starting to deliver the potential that we've been talking about for some time, up 30%. 330 crores of revenue for the quarter is starting to move towards profitability, is profitable now as well. And therefore, you see, again, the remarkable number of profit after tax growth of 54% for the farm business. As you think about achieving full potential, minor finance is one where I'd look at this as a breakout quarter. We've talked earlier about improving asset quality, about tighter controls and technology and data being a key part of the business. All of that is done. Asset quality is maintained steadily at less than four and a half for GNPA. It's at less than four in fact for this quarter. Controls, a lot of work has been done and the business has a much stronger set of controls now. We are looking to pivot to growth. because we've got technology and data also largely in place with the Udaan stack that we've talked about in the past going live and very strong adoption across our teams for Udaan which is effectively creating a whole new system architecture, much better customer experience and much easier process that will result in not just customer delight but also lower costs as we go forward. And that digital transformation is done. We also see a name improvement this time of 47 basis points. AUM growth of 13%. This is despite not really focusing on growth for the last couple of years. But we will, as I said earlier, pivot to growth now. And that has overall resulted in a very strong number of operational performance, 45% profit offer tax growth for this quarter. Tech Mahindra on track, gains in BFSI, manufacturing, and retail in a tough industry. Accelerated our AI effort, have launched Orion. Margin progression is on track, as has been outlined by us as well. And therefore, we feel good about where this business is and, again, reflected in some ways in the operational patent number for 35% growth. As you look at our scalable growth gems, logistics with Hemant coming in has seen just a remarkable improvement across various parameters from an operational standpoint. We will start seeing the benefits of that from a financial standpoint as well. But that will take a little bit of time, not too long. But we're starting to see some very, very strong execution. And we see the first quarter for a positive gross margin for the express business growth. White space reduction, which is excess warehouse space that we had, has been reduced quite significantly. Not at the level where we want it as yet, but still more work to be done on that. E-commerce segment growth, so revenues up 11%. EBITDA is up 70 basis points at 5%. And putting the business on a very solid turnaround track that we will start seeing more results for. Hospitality occupancy hurt by some of the weather related issues in this quarter and that's been offset by average unit realisation being much higher at 85%. We started to focus a lot more on quality and on the average unit realisation as compared to just number of members. So number of members you will see 1% growth but this is a key area for us. Some geopolitical headwinds for our holiday club business in Finland. But it's a business that's still profitable, a good asset overall. But it's one that we feel can do a lot more as we think about holidays going to the next level. Room inventory of 5% and on balance, what you'll see here is a good, strong business that delivers very well for its customers, has a potential to grow to a lot more. And we will come back with... details on how we do that in not so distant the future real estate on a very strong trajectory you saw GDP last year being extremely strong. That trend continues this year as well. Last year, if you remember, we had the 37-acre land in Pandoop as part of our GDP and resulting in maybe somewhere around 18,000 crores. I don't have the exact number, but somewhere in that range. And this year is also on a very, very strong track. So you see this business be one that – has broken out again. The plan for GDP growth for pre-sales growth, rather, which is a key metric from a real estate standpoint for this decade is 14x from what we had in fiscal 20 to what we planned for in fiscal 30. And the business is still looking at how do we grow faster than that. And that's really what we've seen here. The GDP that's required for the pre-sales growth for the next five years is largely in place as well, which gives us confidence that the delivery is more based on execution now, not based on external market factors. And that's what you see in the launch pipeline. In addition to that, good realization from the IC business. So residential pre-sales up 89%. GDP acquired up 3x, still coming from a fairly good year last year. And that brings me to the slide that you've been very used to seeing, consistent delivery on our commitments. ROE continues to be in the range of 18%. This quarter it's 19.4. And EPS from the time we had committed 15% to 20% EPS growth, we've delivered a 35% EPS growth. So all in all, very strong execution across businesses for us. And that's where the word delight comes from. And with that,

Hi everyone, thanks Anish. Quick look, you have seen a lot of this, I am just going to zip through quickly. The volumes were up 32% for the quarter, of course, with the preponement of the Navratras, you know, so it is not completely like to like, but still a very robust growth and gain in market share of 50 basis points. The trend continues to be a strong trend with 44% market share in the first half of this year. 70 lakh tractors rolled out between the two brands, of course over decades, but 45 lakhs for the Mahindra brand and 25 lakhs for the Swaraj brand. Both milestones got achieved between September and August this year. Farm machinery business saw a very good quarter, 330 crores every month, blocked 100 crores plus. So it was a very, very strong quarter performance. And we are seeing good momentum now kicking in into the farm machinery business. The farm margins were very strong. Core PBIT for core tractor PBIT was upward of 20.6%, which is a very strong performance and something which makes us feel good about. Normally quarter 2 is not a very strong profit quarter. It's quarter 1 and quarter 3. So 20.6% in quarter 2 is a very strong margin performance. This is a chart we normally show you with respect to market growth, how we are able to keep a band of margin and we have seen now consistently last three quarters of 20% plus core tractor margin. The PBIT growth has been 44%, this is consolidated with a 1600 crores profit. On the auto side, 7% growth, as Anish mentioned, impacted by complex logistic issues starting right from 15th August and then the GST announcement on 4th September, after which we completely... stopped all high sales products uh so we we then had a huge bundling towards the end but as you saw the october numbers kind of made up for uh the loss in september uh billing numbers uh very positive trend that we are beginning to see on lcvs finally uh quarter two saw 13 growth for us and we gained some market share so as you see uh When we come to the LCV chart, after many quarters of flattish volume, we are finally seeing growth in the segment. The volume dip in quarter 2 is a reflection of the transition of GST and the billing. But overall, depending on whichever cut you look at it, we are in the mid to high teens. So if you look at April to September, April to October, only festival days, you know, retail, we are in the mid to high teens irrespective of the cut by way of how RSEV growth has happened. Revenue market share still continues to be number one. Come down marginally from the previous quarter because of the reasons that we spoke. But otherwise... strong performance. We introduced the two new Boleros. They got delayed a little bit because of liquidation of the older versions as GST transition was happening but the response has been very very strong. All versions are priced below 10 lakhs which is a great opportunity to create category and with the changes that we made we ourselves are pleasantly surprised with the kind of response that the market has brought forth for both of these changes and both the new versions that are out there. The Thar 3 door with the rocks interiors coming in, some minor exterior changes also got a very good response and the benefits of all of these because both of these were mid-cycle in the middle of festival transitions. We will see the benefits of that as we move into the next quarters. We sold 30,000 electric SUVs totally cumulative till date. Very good feedback from customers, very good word of mouth, very good analytics that we now have on the kind of usage, how much of it is more than 1000 kilometers per month usage, 20 days more per month. So on and so forth. We will put out this analytics. We were thinking of whether we should do it today, but then we said we'll reserve that for 26 November, which is the first anniversary. And we will put out a more comprehensive customer understanding with numbers because, you know, these are all connected vehicles and we have some really good analytics on how the vehicle is being used and profile of people and, you know, percentage of customers who've run vehicles. So many kilometers per day, so many times in their ownership cycle. So there's some really good analytics. We'll put that out in a comprehensive release on the 26th of November. The Batman edition has been a huge revelation and a huge learning for us. This shows us what... It actually came out of customers who, when they started seeing the Black B6, started calling it the Batmobile. That's what gave us the idea to do the Batman edition. And then we tied up with it. We announced it at 300. We saw the demand is going to be huge. So we increased that to $999 which got sold in no time. So we are in the process of completing the deliveries and we will talk more as we go forward but we have learnt a lot out of how to use special editions out of the Batman experience. The penetration in our portfolio is now 8.7%, which we think is a very good number at this stage of the launch with the two products that are out. This should strengthen further as we introduce and add more products into the portfolio. In the first half, we have been at revenue number one. In quarter two, we were number two. we had a competitor who had a new product in and you can see that there is a small gap but we were in the quarter marginally below number one. This is the point I was making on LCWC of reasonably large period of time which was flattish and then we have seen 69.6, 69,600 volume in one quarter as very positive turn in the segment. So the auto margins are this is a standalone without contract manufacturing. The next chart will explain this as a format we put out. So 10.3% is you know we believe a very strong performance. This is how it breaks up. So what you see as reported is 9.2%. which is 10.3, which is a standalone business. Contract manufacturing, we make 10 crores on the 2900 crores. So that drops it to 0.3 and the weighted of that is 9.2. So we will continue to show it like this so that you are able to see the operating auto performance without the contract manufacturing getting merged into that. We also said that you see the end-to-end of the electric performance and hence you see Mahindra Electric as a company which had an EBITDA of 173 crores in the quarter. This only reckons the PLI for that quarter. As Anish mentioned, the PLI that we got for quarter 4 of last year and quarter 1 of this year is treated as exceptional. So this is only the quarter 2 PLI accrued which takes the EBITDA to 173 crores and we earned 29 crores as contract manufacturing. So the end to end of that is 173 plus 29 which is the 202 that you see up. Last mile mobility had a very good quarter, 42.3% market share and as you can see a very strong electric volume of 32,000. The auto consolidated you have seen this, revenue grew 25%, PBIT grew 14%. Coming to the event on 26th, 27th, so this is my closing couple of videos. We see a huge opportunity to build on the equity we have around racing. India has become much more conscious of racing. Two things that changed. One is the Netflix show on Formula Racing. The second is the movie F1. Both of these have heightened awareness around racing. We had a really good season last year. We were number four ahead of many strong pedigree brands. We do want to leverage this as we start the new racing season in December in Sao Paulo. So we have a video which we've been running over the last couple of weeks leading into the 26th event where we will reveal some of the new livery and the prep going into the December races. So the first video is really about that. This is on air for the last few days. Thank you. So this is one part of what's going to happen on 26th November in Bangalore. We've also started teasing the 9S as we're now calling it. So the first teaser was out yesterday, which I'll play for you now. and the second teaser is just getting out as we speak

So thank you.

With that, I'll hand over to Amar. We're excited about 26, 27 November.

Thank you Rajesh. So you've seen this chart but I just after the media interaction I got a few questions so I just want to reiterate a few things about how we call out one offs. We don't call out something we hadn't called out last year when we are doing a comparison to last year. If you look at our charts for last year, we had the 304 gain for land sales called out last year because it was truly a one-off event and is not likely to repeat. And so the intent of showing that again this year is to make sure you have an operational baseline to compare to. Similarly, if you see, even though there was a big PLI gain in the current year, it was offset by the tax, one-time tax we paid on SML, which is why that is the net impact of that is the 14 that's called out. You'll see exactly these numbers reflected next year when you see that. So we are very consistent in this. I just want to reiterate that because I got a lot of questions on it after the media interview. And even the criteria for calling out something as a one-off, It is not a sub 100 or even sub 200. We would typically take something which is above 200 crores as even for consideration in our one-offs. Okay, so I just wanted to clarify that. This chart will... Gives you the picture that Anish showed on one page. So I just wanted to retread again the key messages there. You see the auto growth. You see the phenomenal farm growth. Even in services, you can see the TechM and Mahindra Finance. And as he called out on his chart on growth gems, that growth gems and investment line item does include a one-time chart we took for Mahindra Holidays, details of which you can see from their reports. It is truly a one-time and it is a tax catch-up that we had to do and we have proactively done that in line with our very strong governance standards. And you can see that reflected here, the big contribution from farm but also very meaningful contribution from Otto and the services franchise. Standalone results, exactly same principle. You'll see the 201 out of the 304, 201 was land sale of what we used to call K land, which is what was reflected last year as well. So we've called that out. And in the 219 is the tax we had on the SML transaction. That is also called out. As I mentioned again, it's one off. So 23% year to date growth in revenue, 31%. year-to-date growth in profitability, excluding those two one-house that we have called out. So clearly very, very strong performance. This is the chart that most proud of because I think this reflects a lot of effort from the teams because you've got to keep both in sync. You've got good profitability, but if you don't have good receivable management, payables, etc., you could get out of sync. And this is something which reflects the strength of the results you've seen in the first half. You can see we started the year at 27,000 crores. We have spent close to 2500 crores on CapEx. We have done the three rights issues that you are well familiar with. We have done the SML transaction and we paid out dividends yet the total cash balance has increased in the first half. So it reflects very, very strong operational results across the group. But special call out also for the auto and farm team for what they have done on working capital management through, as Anish mentioned, some very trying circumstances that we have seen at least in the second quarter. So I'll wrap up with that and we'll take questions from here. Thank you.

Okay, we can start with the Q&A. Take the first portion from Kapil of Nomura.

Yeah, thanks. Congratulations team. I think it was a really tough quarter. So solid performance. My first question is on the GST cuts. If you could just share your thoughts on what is the impact across your portfolio? So on the automotive side, we have the 40% GST bracket and the 18% GST bracket. What are your thoughts on how the consumers are reacting? Because some of your peers have said that the industry growth may be around 6% going ahead with 10% growth in small cars and not so much effectively growth coming from SUVs. And then maybe you can share some thoughts on LCBs and tractors also if you feel with the GST card there will be some impact on demand there as well. So I'll leave it open for you to share the details across the portfolio.

So I will start with an overall view and then go to your question specifically and will request Rajesh to answer that. Overall, I think this is a very, very good move by the government. Because for the longer term, it simplifies things as well as reduces GST. And there will be, in our view, fairly strong multi-year benefits from this move. In the shorter term, what we are seeing is The fact that the strong fundamentals of the economy were waiting for some stimulus to be able to translate that into optimism from an overall feeling standpoint, which is important as well. And we're seeing that happen right now. So that's a short-term impact. And for this, I talk about across the economy. I'm not talking about Ottawa Farm in particular. We operate in, as you know, in 70% of India's GDP and we're seeing that across businesses right now as a very positive thing. So, therefore, for both of those aspects, we think it's a very good step forward. Yes, a little bit of pain in the short run as we talked about, but that's fine. We'll take that any time for the benefits that we're seeing here. And with that, I'll request Rajesh to specifically answer your question.

So, I'll couple like to walk through all the three segments because it's important to understand each. So, Innovate Tractors and LCVM first taking as one bucket. For the last five years, customers have seen unprecedented price increases. At least I haven't, you know, if you go back many years, not seen this kind of a price increase in such a short period of time. Huge commodity increases that happened starting 2020 more like 2021. Regulation change that kicked in especially with BS6 and then BS6.2 and multiple other regulatory costs that got added. So customers have seen more than 25-30% cost increases. This was having especially in the LCV segment a major drag on ability to grow. Because the fleet owner or the vehicle owner was not able to pass on that on a freight cost charge to customer. So it was creating a drag. So I think this was much needed to As a fillip to boost demand and it's not a small, I mean I don't think any OEM could have taken a 10-12% price correction. It was just way too much for anyone to do to you know kind of trigger upside in demand. So as Anish said I think this is a very significant move from a overall approach to boosting growth in the economy. So I think LCVs will be already seeing that through the festival period, but we'll see a lot of the latent demand over many quarters, which didn't kick in, probably start to kick in later. That is accompanied with, you know, positive Monday arrivals and many other things. But, you know, we've been talking about Monday arrivals for a while. But I think both these needed to have come together and that's happening now. So that's a positive enabler. On the tractor side, again, the same thing. It is very, very high cost increases on the tractor commodity and other things. So, you know, it's quite a substantial reduction again for the farmer. So it is that along with the mood right now in rural many enabling factors. So both of these are clear category enabler in both these segments is a clear category enabler in place for the GST. Coming to passenger vehicles, everyone has their point of view on how this story will play out. Whichever way it plays out, it's going to play out for good. Now whether some sub-segment gains more or less, time will tell. Every customer set is looking for something in particular to their life when they are making a purchase decision. So, you know, when we think of what you were calling the 40% slab, so if you think of breakers of the 40% slab, they actually start from interestingly from even as low as In fact, we have done an analytics of volumes that happen in different GST slabs earlier connected to size and price. And you will find in the earlier 48% slab, vehicles as low as 7 lakhs going up all the way to 50 lakhs or 60 lakhs or more. So, now for a customer who is in the 12, 15, 17 lakh bracket, they are still paying 40% And they're at a certain budget. Now, they are able to move up the ladder of feature offering for the budget they already had. So, they are not first-time buyers who are going to come into the category or not based on a certain price. But what they choose to buy, they can upgrade based on a certain price. So there may be customers who are till now not thinking about buying, let's say, a bigger SUV, but today can because we've enabled it. And I just spoke about an example of, let's say, Bolero or Bolero Neo. If that product was one and a half, two lakhs more, it may have excluded some set of customers. But today when they won below 10 lakh and hence we are also able to get the on-road benefit because as you all know, most states have differential road tax about 10 lakhs. You start getting the multiplier effect on on-road price. This along with... reducing interest rates creates a compelling package for those who are in the mid end of the market to upgrade either from what they were buying earlier. And as some of our peers referring to that comment would say, for those who are not thinking of buying a car earlier and are now thinking of buying a car earlier. So you have a spectrum of buyers who are going to be reacting differently. For some people, it's a question of should I buy a car or not? And, you know, the size of the overall passenger vehicle market goes up because more people come in. Over a period of time, they're going to upgrade. And while we may not get that customer into our portfolio today, they will be our customers for the future. So I think, you know, at the end of the day, I'm sorry, giving a very long answer to your short question. But I think this is going to be good for everybody.

No, that was the intent. Actually, I wanted a more detailed answer. But can you cover EVs also within that answer? Is there an impact because the differential has changed?

So far we are not seeing that. I still think the EV propositions. Firstly, most of our EVs are in the big size and hence play against the big SUVs. So the gap still is 5 to 40. We were not in the 5 to 28 category. We were in the 5 to 48 category. So yes, the gap has come down. But 5 to 40 is still a very substantial gap.

Can I just add one thing which is a fringe benefit of this is the simplification on the working capital side for the farm business is pretty significant. I don't know whether that was as obvious earlier. That is a business which used to have a 12, 18, 28 kind of structure, right? And now it's far simpler for the team to manage and working capital will be better managed as a result and should free up some as well.

It's a big benefit. Thanks so much. Sir, second question is on the CAFE norms. We saw some changes in the draft. Particularly, I was a bit surprised to see lower credits for EVs than what was originally being proposed. Where are you placed on there? What is the EV penetration required now? Is this draft final? Do you need hybrids in your portfolio as well as you move forward? And also if you can share some color on festive bookings since your portfolio is under transition probably if you can share some numbers there would be helpful.

I'll just start again by saying that we don't believe the draft is final. There are a number of inputs that have been sent after that across the industry and SIAM also has sent or is sending a set of inputs on that. And our sense is the government will look at all of those before finalizing it.

Yeah, so the fundamental word draft means it's not final and we treat it as such. So there is a process of dialogue and discussion which was the purpose of the draft and that process is right now under discussion. In either case, as we have said, you know, we will be ready to do what we need to do customer expectations and part of that is managing cafe norms. I think the journey on cafe is a while away. We feel comfortable that with what is likely to be an outcome, not necessarily the current draft in its process, we will be able to have enough EV in our portfolio along with any other fuel types that are needed for to be able to meet the CAFE norms. So that's the direction towards which we are working. But the draft is far from final.

And so on the festive?

On the festive, I in a way indicated that couple while I was presenting. So you know there are multiple ways to cut it and everybody is cutting it in the data in different ways. There isn't any one simple way to look at it. So actually we have eight cuts of whichever way you want to look at it. The reason I am saying that is this time the first seven days of Navratra were way better because the period before Navratra, customers were not really buying at all. compared to normally pre-Navratri you had Sharad but South was buying who were not so much into the Sharad mindset. So it's just very hard to compare anything. So we are just looking at basically April to October as a period or Quarter two as a period or we also looked at only September, October. So whichever way we look at it, we are mid to high teens on our retails, you know, as a number. So we are in line with what we've been thinking should be the offtake. I'm not getting into first day of Navratri to last day of Diwali because this time demand has spilled over beyond last day of Diwali as well as we've all seen when you look at Vahan. So I don't think there's any one right way to cut it and we've cut it multiple ways but we feel overall comfortable. Given the limitations that were there of having the right product mix because of, you know, dispatch delays and all of that. So given all of that, I think we feel comfortable about the way demand works. Not specifically reacting to bookings right now because actually booking numbers are very, very, very healthy. It's just hard to say what of that is going to convert and we decided not to get into sharing bookings. But booking momentum has been much stronger than retail momentum.

Thank you.

Best wishes.

Nothing. Please proceed.

Thank you very much. Just on this consumer behavior, what you talked about, people might want to upgrade because it's not like income is increasing, it's like the price is reducing part. How do you see that mix of, because 1.5 liter diesel becomes very attractive, especially for the mid SUVs, process of petrol, when we look at the price bracket. And some of your competitors, especially Koreans, are talking about a lot of bookings coming in the diesel in the mid-size, and we have that very strong product there. So any transition, any consumer behavior you have seen a change where you see, because the product is very well accepted, some market shaking can happen there, how consumer is behaving to that part? diesel versus petrol, especially in that particular segment. And second question to Anish sir, I think as an investor, in 2023 I asked you a lot of questions about RBL.

You should have placed bets as to how soon that RBL question is going to come in.

Finally, a very big strategy investor is there. How are you thinking about now, you know, he already owns, I think, 60% of the bank. So, just any input from yourself, how now are you thinking about that part? So, those are the two questions. Thank you.

So, I'll start with that as a shorter answer because as we said earlier, one of the key reasons was a treasury investment as well. We saw significant value there. And that has paid out. So if you just see the gains, it's probably more than 50%. I don't know the exact number. But for us, it is in a sense a validation of what we had seen. And it's one that we will continue to look at as a treasury investment, make decisions on that basis from a treasury standpoint. In the previous session with the press, I was joking and saying someone should just do an analysis of how much timeshare this gets versus the real impact on M&M. And you'll see a huge inverse correlation from that standpoint because everyone loves this question. So it's a good one to ask.

Your question is primarily around diesel petrol?

Diesel was there and then diesel became attractive to petrol 1.5 years ago.

Yes, I'll just quickly walk through different parts of our portfolio. So 3XO is primarily a petrol offering now more than 75-80% is petrol. We're not seeing at this point at least I have no input that there is a shift there towards diesel. There is a lot of shift there by way of which version becomes attractive because as prices come down a different version becomes attractive than what was so before the price change. So in 3XO at least I have not so far picked up that there is more diesel demand because of a price drop. Though it is an interesting input and we will watch it on 3XO but at least so far I don't have that input. On the rest of our portfolio, our diesel is in the region of 70-75%. 25-30% is the gasoline, varies from product to product. Diesel can be a compelling proposition now because of the price drop and that puts us at a competitive advantage clearly. In, you know, following up on Kapil's earlier question, you know, different people are going to get different things out of the GST rate cut. I was earlier focusing on the ability to upgrade vertically. But an interesting perspective could be gasoline, diesel as well, which will give us a competitive strength. But it's something, honestly, we've not picked up yet. And thanks for sharing that. We'll watch for that more carefully.

Thank you sir and congrats on the results. Sir, firstly on the LCV side, festive season at least Vahan shows a very strong double digit growth and how do you see the full year outlook and within LCV, you know, for your customer set, Would there be a sense on for how much of the customers would the GST be a pass through and for how many of them would the GST reduction will actually be a benefit when they are purchasing the product?

Just to be clear on the second part of the question, you were talking about where they are able to get a GST set up, which is company buying, right? That's the point. Yeah. So the second one is, let me just try and get that out of the way. For pickups, we have very reasonably large, you know, market operation buying, which are individuals are not buying in companies or, you know, small companies. small aggregators of 3, 4, 5 vehicles who I don't think will be getting the GST trade-off. Nail, you want to, you have a different take? 60% are market MLOs or whatever. So, it's a fairly large chunk which retains the benefit. On the first question, you know, everyone will have a different view on it. I'm sticking my neck out and saying that I think the outlook will be a double-digit growth for the year. I think if this momentum continues, which means not just the price impact, but, you know, there isn't too much of destruction in crops because of the late rains and Monday arrivals continue to be good and robust. So, you know, the rest of the economic parameters... play out the way they have played out in the last 2-3 months along with the rate cut. I think we'll end up the year at double digit but some may argue that it will be high single digits but at least I would stick my neck out to say that I would expect to see low double digit growth for the category.

Thanks for that and also on the tractor side now you are seeing a low double digit growth for the full year. So how are you seeing the mix between north and other regions because other regions seem to be growing at a much faster pace and also recently there are some concerns in terms of you know on the rain side and seasonal rain side, cyclone side, anything we should read into it. So that was the part.

Yeah, so Maharashtra, Karnataka in particular have seen really strong growth this year. UPs and UP Rajasthan have not been all that bad. They are high single digits. So they have been I think from order number 8-9% range. So So, in a way, from a market share, waiting point of view, that's weighing point of view, that's good for us, that's positive for us. These are very strong markets for both Mahindra and Swaraj, Maharashtra, Karnataka, Telangana, Andhra, so on. So, I... Now whether this will continue, I think my sense is it will continue because some of these states were on very low base. And you know, including for the second half of this year. So I would expect that this mix is not changing too much for the balance part of the year. The effect of rains we are trying to assess. I have actually struggled to see in the past a correlation between significant off-seasonal rains or you know often we get this happening also in Feb-March. It's not very directly correlated to tractor sales is kind of my intuitive judgment on this. But in this particular case we need to wait and watch and see what's happening and how much damage. The fact that there has been damage at this stage is uncommon. Normally you get a little bit more of that in the Feb-March period when you get the early rains and you get damage which I have not seen too much of impact of that. Hopefully this is not going to have too much. We are not factoring in a slowdown because of the delayed rain which has just happened.

Thanks, thanks for that. I mean, it's a delightful result. Just two-three concerns, wanted your thoughts on that. One is that Nexperia, would it have an impact on production in Q3 or Q4? Second, on the SES refund and third, commodity prices, precious metal has been going up.

Second one is dealer says. So in the first one, we have a reasonably high confidence that quarter 3 is fairly covered. We believe that the situation will ease out by quarter four. If not, I'm sure you've been tracking Xperia closely. It's a very low value commodity kind of chip, roughly 20 cents. So it's not hard to substitute. It's not like the... semiconductor issue that was there through COVID, which were all very specialized and very hard to replace and needed extensive validation. These are more commodity type chips. So it's a question of, you know, finding substitutes for which we need a few weeks. We have over the last three, four weeks already solved for many, many existing parts, which now gives us comfort that by and large this water is covered. Hopefully by the time we come towards the end of November, we would have covered with options most of our portfolio. There are multiple stakeholders hoping to resolve this issue. It has impacted Europe. OEMs quite significantly and there's a lot of work happening between a couple of countries in Europe with China to unlock this problem. So I don't think as of now we do treat it as an extreme risk and hence you know extreme caution by way of mitigation. So I hopefully this should not be an issue but that being said we have to be very watchful. On the SAIS issue, we are just treating it right now as an issue dealers have to solve for it. Subjudice, as you all know, the FADA has gone to the government, I mean, gone to the Supreme Court, arguing for why it can't be, you know, unilaterally discontinued. There is a valid, they believe they have a valid case. And we'll see how that plays out in court. Our view will be to wait and watch that out. In any case, it's a dealer issue. It's a dealer liability in the books of the dealer. whatever we had to take by way of cost that we incurred related to CES we built in. So we are not carrying anything in our books over. But of course this is a dealer point of view. Can you repeat the third question? Material inflation on precious metals. So precious metals had gone up. It started easing off a little bit as we all know over the last week or 10 days. That's something that we need to watch for. you know, each of these are volatilities that, you know, come out of nowhere. So, we'll watch for that is all I can say. I mean, this is all a part of managing life today. You don't know what's coming at you from where.

Just if you don't mind my adding something on that. I just want you to all the feel good that the team does have a very strong focus on this and we do hedge everything. So there was good anticipation by the strategic sourcing team that precious metals will see some pressure. We have taken a hedge position from January to now on average, three precious metals have gone up between 60 to 80%. So you're absolutely right. But we are not as exposed to this phase because we have taken hedges. We've taken the offsetting gains for the expense that we have seen. But if, of course, the trend continues, then the hedging costs will go up and that will impact.

Thanks for that.

I'll just take a few questions online. This is from Arvind Sharma of Citi. Amar, the question is, where would PLI reflect in the standalone numbers and what is the broad amount? Also, how much of it accrues to XEV9 and BE6?

So, PLI actually doesn't come up in the standalone results because it goes into mailbox. It is reflected as a revenue item. And the total amount for the quarter was around 460 of which 150 pertain to 463 exactly. 150 pertains to 51 pertains to the quarter and 312 pertains to prior period. That's what we have called out effectively. The tax impact of tax affected amount of that is what we have called out in our results. And it all is for the 9E. The 6 has not yet qualified for PLA.

Next question, this is Pramod of UBS. Rajesh, there are three questions. Can you please share a full air guidance for SUV, SUV and tractors? Second question, PLI by which air do you expect PLI incentives to fade for the EVs? And the third question, can you share any EV booking trend post the GST cut on the ICE vehicles?

Just to clarify the last question, EV booking trend or ICE?

So has it impacted the EV booking?

So on SUV, for us, Pramod, we stay with mid to high teens, which was what we said at the beginning of the year. We are not changing that. We believe mid to high itself was an aggressive outlook that we had put out and we stay with that number. So, for LCV, we think it will be, I just answered that in a way to say, we think it will be low double digits for the full year. For tractors, we had said in the region of 5 to 7%, I think, at the beginning of the year, which we are now saying as low double digits. So, we are upping the tractor industry outlook from 6 to 5 to 7% to maybe like 10 to 12% kind of thing. So, low double digits. PLI goes on till F28 and we expect that it will continue till then, if not longer. But hopefully it should continue till then. The claims against PLI, there is enough funds left. So it should comfortably last us till F28.

And it was worn out in that 20 days.

Yeah, the EV, it's too early to say right now promote. But as you can see, even through the festival period, the overall EV segment has continued to grow rapidly. With new products coming in from competitors, the segment has continued to remain strong. And we believe that will continue because... As I mentioned, especially in the segment in which we play and some of the new products have come in, the gap between 5 and 40 is still very substantial. Of course, it has come down from 5 to 48 to 5 to 40, but 5 to 40 is still a very large gap and we do not see that happening. There have been, you know, on-off issues. Haryana, we are waiting for the EV policy to get affected, which affects the NCR region because you have Gurgaon as part of that. So, you know, there has been an uncertainty on that. UP went through a few days of, you know, old policy to new policy. So, you know, some of the state level things are, you know, also kind of getting clarified. which also makes a difference to on-road price. So it's not just the GST, it's due to see it as a combination. So the new UP policy, the benefit is only on EV and not on hybrid, which was there earlier from what came in in October. So overall, too early to say if there's an effect, but we don't see that really having an effect on EV demand.

Anish, there is a question, it says you had expressed strong confidence that India will achieve a 8 to 10% annual GDP growth. Can you please elaborate on impact of the revised GST and other government incentives and initiatives on the M&M businesses other than auto and farm?

So not revising my 8 to 10% estimate. As I said earlier, the foundation is strong. The sentiment change with this is what we are seeing play out. And that's why we felt that the economy will grow at 8% to 10% for the next few years. M&M results, as you've seen, are fairly strong in this current quarter. And I can't say much for future quarters, but we will promise to deliver what is in our control and deal with things that are outside our control the best we can.

There is another question there that any further right issue capital investment planned in any of the listed or other subsidiaries in the near future?

There are no rights issues planned in the near future. Capital investment should be made in all businesses as they need them as part of our growth plans.

Next question, this is from Chandru of Goldman. The first question there is about PAC-1 and PAC-2. Can you please discuss how PAC-1 and PAC-2 mix is progressing? after deliveries have commenced earlier this year. Can you also share some color on the drivers that can help raise our BEV mix towards the targeted range of category vis-a-vis the 8 to 10% BEV mix today?

Pack 1 continues to be sub 10% which is what we would desire by way of delivery. Pack 2, we wanted Pack 2 to be a significant pack because it creates the right price point, which is why we had introduced a Pack 2 79, which is doing well. Right now, Pack 2s are roughly 35-40% of each of the products. So, pack 1 is sub 10 then 35, 40 and 50 to 60 is pack 3 broadly that's the mix. On to meet CAFE 3 percentage you know it's going to depend on multiple things once we see the final policy get play out whether it's going to be MIDC cycle, WLT cycle, whether tailpipe emissions on the WLTP cycle will be treated as zero or not. So, you know, the percentages vary a lot. But, you know, we have new products coming in. So the eight odd percent penetration that has been achieved has been within five to six months of launch of being in the market with only two of our products and there is a portfolio of products that will come. So, when we are talking about CAFE 3, we are talking about roughly 2 years away. So, we have a substantial time to get to whatever is the needed percentage from where we are today.

There is another question which says, we saw a decline in the monthly numbers for SML last month and a strong bounce back for the month of October. Were there any production bottlenecks or any process refinements? What was the reason for the decline in the month of September?

I think some of it was the transition issues around GSP and getting the vehicles out, but nothing more to be read into that. Of course, the SML does very well when school bus season kicks in. So we do see a big increase in market share in the quarters or months where school bus buying happens. They are very strong, as we know, in the bus segment.

This is from Gunjan at Bofa. Some of these are taken, sorry, take the ones which are not there. It's tractors, solid momentum. Can you give more color on underlying trends supporting this euphoria? Sustainability of this and update on TREM 5 regulations. And the second question, how should we see the margin for meal trending ahead?

So TRIM 5, Gunjan, firstly TMA is aligned, has had meetings with the Agri Ministry. TMA has also met MOT to kind of put reality of implications on moving to very high level of technology from a serviceability in the marketplace. So everyone understands that, you know, implementing TRIM 5 in a country like ours where you, farmers have to have service capability of very high and technology may not be practical. So there is an understanding that we need the right solution for rural India so that serviceability for farmers is not constrained. Right now, there is a dialoguing on which is the TMA proposal to move the 25 to 50 horsepower from 2026 to 2028. That's a TMA proposal. And for the less than 25 horsepower, the date was April 26. Again, there is a conversation on to postpone that as well. Both of these are under consideration. In the less than 25 horsepower, the unit cost is not that high. And the technology needed is also not that hard to service. But there is a conversation on between Tractor Manufacturers Association and the rest of the stakeholders on what the implications of transitioning to TETRAM 5 are. On what you are calling euphoria, you know, it has been a strong festive season for tractors across the board. GST is of course one factor, but many underlying factors were building up. We've been saying over the last few quarters that the rural economy has been on a path to strong recovery. The rains have helped, reservoir levels have improved. The government spending, which is a key indicator of tractor buying as we've shared in the past, has been strong. Farmer terms of trade have not deteriorated. Export of crops from India have grown, which adds to cash flow to farmers. So multiple on-ground factors have favoured tractor buying. And the GST has really enabled that process of buying. So I think part of your question was how sustainable is that? You know, it's really hard to give an outlook for next year, but we just stay with our outlook for this year, moving up from 5% to 7% industry growth to 10% to 12% industry growth.

There was another question on margin for meal.

Margin for meal, yeah. So margin for mail is going to be a series of things that kick in, which is what is the right pack mix and pricing to enable growth in the segment. We are at that stage where we are into category creation. So we do want to make sure that we don't lose the overall objective of driving electric vehicle penetration by way of not doing the right things that are needed to make that happen. We do have BS6 which will hopefully by April 2026 meet PLI as well. So multiple localization actions are in place which will all get executed in a way by which hopefully by quarter 1 of next year B6 will also meet PLI. So that will be one positive enabler. And there is some of the localization benefits also flow through to current portfolio products that are there, which is the 9E as well. So multiple actions, but we just want to say that the, you know, a few quarters back we said, you know, we have a path by which we want to go and I think just a positive EBITDA was a very good surprise for all of you. Now we are seeing a healthy EBITDA and we don't want to lose sight of the fact that we want to create this category and have to play a role in driving volumes in this category because that is what will fundamentally ensure long term returns and long term margins. So we don't want to trade off the ability to grow for driving short term margins. That does not mean we are not taking all actions to keep costs under control but we do want to make sure that we are driving the adoption of the category in the most appropriate way.

This is a question from BII. This is Aditya Banot. Do you see any details on first buyer penetration for the four-wheeler TVs? Any trends that you have noticed?

Sorry, I didn't understand. What? First buyer penetration. First buyer. Okay, first. when we say first buyer is that do you mean first time vehicle buyer? No, very very few. What we do see is very substantial portion of non-Mahindra. Almost 85% of our dev buyers have not owned a Mahindra earlier. So it's a completely new target group that we are getting in. Fairly large number have multiple car ownerships but We don't really have too much of, never bought a vehicle earlier in our portfolio. Nell? Baseball. Baseball.

Right. This is from ICICI Prudential Sakshat. He's asking, we had mentioned about three new ICE SUVs in calendar year 2026. Two mid-cycle announcements and one new SUV. That was a composition we had mentioned. Does this include Bolero and Thar 3-door refresh, which we have launched recently? Yes. Can you share more details on these ICE launches in 26?

Unfortunately, we can't share more details. The reason we don't share more details on ICE just so that, you know, doesn't look like we're evading the question is because it does affect buying of current portfolio products wherever there's uncertainty in customers. So we are very mindful that being a core part of our product that We don't announce any new ICE product too much in advance for the year that is coming. So we wait and watch as we go ahead. But we have a couple of, three, four interesting things happening in 2026 now. Is that number about right?

The question is also that the Bolero and the Thar three-door refresh, was that a part of the three? No. This is another question. Exports had a strong growth both in SUV and tractors. Which are the key markets showing high growth?

Yeah, so for us, auto, firstly on auto exports... We are seeing very good response to 3XO both in South Africa and Australia. That's really very good momentum there. The 700 is also doing decently in both these markets. So Australia and South Africa have become two very important parts of the export leg. The neighboring countries which had kind of, you know, got into a little bit of a slowdown for multiple reasons, money availability, so on and so forth, have all begun to open up. So Sri Lanka, Bangladesh, all of these, Nepal as well have all opened up. We've sent our first lot of EVs to Nepal. They're on the way in this quarter. So it seems to be very good. So demand that's organically got generated in Nepal for the EVs probably spill over out of the India story. So that's broadly what's happening on the auto side. On the tractor side, the neighboring countries again have opened up, which, you know, Bangladesh was having a lot of issues for a while. Availability of LC, so on. Sri Lanka had slowed down. Nepal had slowed down. So all of those have come back. Algeria, we started doing business in. So that's which again was shut for a long period of time because of the government restrictions. not allowing imports in without a certain license. Most India exports to Algeria had stopped for almost a year and a half or two, which have started. By and large, covered it.

Just taking this one last question, this is Amit of Phillip Capital. What is the company's strategy to grow the farm implements business? And as this business is growing, how do we look at maintaining the margin in line with the tractor margin?

Firstly, I must say that right now the margin is not in line with the tractor margin. We are just starting to make some money. So, we have a path to go. The competitive pool has reasonable margins. As we evolve our volumes, the margins should be much better than what we are making now. So the peers that we have in that segment do make a decent level of margin. Unfortunately, there is no formulaic solution to growing and farm machinery. to get behind product category and then work at it and grow. One of the segments in which we haven't so far been in the past done as well is the harvesters which goes under the Swaraj brand. We've roughly had 4-5% market share. We now have an enhanced improved product which is beginning to do well and that hopefully will help us drive overall growth per unit value the harvest about 20 odd lakhs. So, you know, that does play a key role in driving our top line.

Great. Thank you, everyone. On behalf of Eminem, I would like to thank you for joining us today. Please join us also for our investor day on 20th of November. It's a very exciting day ahead. And join us for snacks in the joining room. Thank you very much.