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