Mahindra & Mahindra 144A

Welcome to the quarter three 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 our auto and farm business, Mr. Rajesh J. Jorikar, and our group CFO, Mr. Amarjyoti Barua. Once the presentation concludes, we will begin with the Q&A session. For the purpose of completeness, I wish to read this out. Certain statements in this meeting with regard to our future growth projects are forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. With that, now I hand over to Dr. Shah for opening remarks.

Hi, good afternoon. It's a pleasure being with you again, more so when our results are in very good shape. And let me start with talking about our key messages as we do every quarter. And what you see again is a continued strong performance across businesses. And you're seeing contribution from all our businesses to delivering very strong results. Operating PAT is up 66%. Reported PAT is up 47%. There are two factors that make the difference between these two numbers. One is labor code impact, which I'm sure you've seen across all companies. And second is one time around Mahindra Finance, where they had a reserve release last year in the same quarter. As we take that out, that increases the operating profit. Volume and margin growth, very strong for both auto and farm. Volume up 23% for both businesses. Margins up 90 basis points for auto, 240 basis points for farm. Farm did have some impairments internationally and that dragged down the overall number, but domestic operating performance was up 64%. I want to highlight three what we call breakthrough performances. And while you will see some numbers on this page and the next page, the breakthrough performances are not because of the numbers. Mind the Finance is up 97% from an operating standpoint, down 9% from a reported standpoint. But beyond the numbers, there were three things that we were focused on for the past three years. Asset quality, controls, and technology, along with putting in place a very strong management team. And that today is in very, very good shape. And you see the results for that. As a result, Mahindra Finance has announced in its analyst call two weeks ago that it will now pivot to growth. And we will start seeing a much faster growth rate, more diversification, and areas that we need to focus on now. For the last three years, we were not talking about growth and focusing on asset quality controls and technology. And that pivot is what creates a breakthrough for Mahindra Finance right now. Lifespaces, profits up 5x, but I will again caveat it by saying that in real estate, as you well know, you will continue to see ups and downs based on occupation certificates coming in because that's when you recognize a profit. But it's breakthrough not just for the profit number, it's breakthrough because we can now see products complete with the profitability we had planned for at the start of the project. We now see a much greater level of urgency in the business. The land acquisition is going very strong. We've had an external investor, Mitsui Furuson, come in. That was announced a couple of days ago. And the business, both from an IC and a residential standpoint, continues to be on a very strong track. And you will continue to see that as we go forward. Logistics, first profitable quarter after 11 quarters. But again, more than the fact that it is the first profitable quarter, is the execution that is being done is very strong. With Hemant Sikka coming in and a few key leaders coming into the business as well, that's really driving logistics in a very, very different way. And it's a business we expect a lot more from. So this is a good stepping stone, but the breakthrough is really driven by execution that the business has shown now. We thought it would be useful to show where does that operating profit growth come from. And therefore, on the left-hand side, what you see is operating profit. But let me first start with the bottom of the page, which has three numbers. 66% operating profit growth. 54% without the Mahindra Finance one time of reserve release last year, and 47% after you take out the labor code impact as well. So those are the three numbers that we're looking at. And it doesn't matter which number you look at it, it's just a very strong performance overall across businesses. Lifespaces up 5x from an operating standpoint. Logistics up 2x. Mahindra Finance 97%. Auto 42%. TechEmp 35%. Farm 7%, as I mentioned, driven more by the international impairments. And investments up significantly because we had a CIE sale, which is in the operating numbers, which we pointed out on the right-hand side here. So that's really a map of where all the businesses are. Yes, there are some other businesses that have done very well, but these were the main ones that were driving growth, and therefore we put them on this page. Consolidated results, up 26% for revenue, up 54% excluding labor code, 47% reported. Drivers, from an auto standpoint, well, Rajesh will cover this in more detail. The key headlines are SUV volume up 26%, continue to be number one there. Margin up 90 basis points. New product launches you've heard about have done very well. Besides revenue market share for SUVs, our LCV share has gone up 10 basis points also at 51.9% now. Farm volume up from an export standpoint 36%. Market share down slightly, but in January we made that up for year to date as well. And farm machinery revenue is up 45%. So we're starting to see much faster growth from a farm machinery standpoint. Mahindra Finance, assets under management up 12%, despite not focusing on growth a whole lot. GS3 continues to be below 4. We continue to maintain 4.5 as the benchmark we've set. But for the last many quarters, we've been below 4. And we've got a new ECL policy, which is more in line with industry, which will help the business as well. And... Technology and controls you don't see on this page, but that's been a huge focus over the last three years. And we've completed projects or are close to completion of certain projects there. And that gives us a lot more comfort around the business overall. Tech Mahindra on track with what it's outlined in terms of its path for F27. And deal wins, margin expansion, all of that playing into that track that Tech Mahindra has outlined. Logistics we spoke about. Only thing I'll add, there is strong momentum in both auto and e-commerce for logistics. Hospitality has given up whatever it has earned in India with an FX exposure with its Finland business. And real estate is on a very strong path, which I mentioned. And this is a page that you've seen many, many times now. Consistent delivery. ROE is up 20.1. But before any question comes, I will say what I always say. We are at 18. It may be slightly higher, slightly lower in any given quarter. So the new bar is not 20. We will continue with 18 plus minus a little bit and we'll continue to drive growth and you see a very strong growth that's been driven in this quarter and year to date as well so far. We are at I think 38% if I've got the exact number year to date growth from a profit standpoint. So I can tell you that's higher than what we had expected at the start of the year as well. With that, let me invite Rajesh to take you through more details.

Hi, everyone. I'm going to run through this quickly. I'm sure you've seen a lot of these slides already, so I'll be quick and give more time for Q&A. The SUV volume was up 26%. We've got to average Q2 and Q3 because Q2 had a lower GST. So even if we average, it will be 17-18%. The very good news is seeing the revival of LCV segment, which we were all wondering why it's not coming into growth. It finally has. The GST has helped. The replacement cycle has kicked in. And we do see this sustaining for some period of time. You see this Q2, Q3, which I just said I think the right way to do is to average it out. Some of the Q3 growth is the GST transition in Q2, which spilled over to Q3, but still we've seen very robust demand in Q3. We did get affected somewhat by the fact that we scaled down XUV700 in Q3 as we were preparing for 7XO. So that has had some effect on the mix and the revenue because literally a month, month and a half we had stopped billing new 700s out in the last quarter. You see revenue market share at 24 odd percent. We think that's about the level we'll be at. There was abnormal peak in Q1 and Q2. These numbers now in, well, earlier also they included the EV numbers. We're just calling that out separately so that we're not going to have a separate slide on EV. On the same slide, you'll see where we are doing, how we're doing on market share in that quarter and YTD. which you see at the bottom. 7X has got very good response, very strong order pipeline and as some of you did mention, customers were back into this waiting period thing which is not always desirable but Kind of also a recognition of the fact that the product has got accepted very well. Big skew again to the top end, in spite of very attractive lower-end versions. Almost 70% plus is the top two versions, which is in a way higher than what we thought, which is also good news. But that's what is adding to the complexity on waiting period, given that the skew is higher than what we expected, especially X7L versions. 41,000 plus ESU we sold, which is really about 4,000 a month as an average. The interesting thing is the 32,000 32.5 crore kilometers that the vehicle has run, which really implies 8,000 laps around the earth equivalent. Goes to show that the vehicles are not just nice parking products in the garages, but are being used a lot and are very mainstream. in the way that customers have adopted usage of this, which is building that positive word of mouth and confidence. We are seeing that translating into 9S, which I'll come to in a minute. A lot of awards, we believe the most prestigious out of these is the EV, the Green Car of the Year at the ICOTI, which is a very very robust jury of multiple auto handles coming together and they have only three awards, one of which is the green car of the year which Naini got. The 9S has got very good feedback as well and response. We had mentioned in one of the earlier quarters that we expected North to do better with the EV portfolio. With the 9S that's happening, that segment was looking for a more conventional shaped SUV which The 9S is balancing well. So it's bringing all the goodness and tech associations of the earlier two products, but in a more conservative or conventional format and in seven-seater. So we are seeing, of course, good response everywhere, but North is adding a new set of customers into the 9S kitty. We had put out what products will come in the calendar and there have been questions around how much have we already launched and what is not. So we just put this slide to clarify that. We had said three new ICE, three ICE SUVs in this year. The new nameplate out of that was 7XO. Two more refreshes will come over and above the Bolero and Bolero Neo. When we had said 3, we had not counted Bolero and Bolero Neo in the 3. So we have done 7XO now, Bolero, Bolero Neo and there will be 2 more refreshes in this calendar year. On EVs, both what we had spoken about are done for this calendar year. So there is no new EV launch happening in this calendar year. LCVs, we had said 2. We have just done Bolero Camper and Bolero Pickup and 2 more will happen in this calendar year. A quick slide on capacity. So we are breaking this up into three phases, so to say. In the calendar 2026, we will work around de-bottlenecking some of the current capacity products where product capacity is running out, more specifically 3XO. And Bolero in Nasik plant. Some of Scorpio N in Chakan plant. So all of these and Thar a little bit. So all of these are kind of out of capacity. We'll aim by July-August to add about... 3,000 to 5,000 between these products per month. Over and above that 3,000 of EVs gets added with the 9S launch. So in a way 6,000 to 7,000 additional capacities on these products get added in F27 on top of what we have in F26. Calendar year 2027 will see the addition of new capacity in Chakkan for the new IQ platform. So one of the Vision S or Vision T which we will launch in 2027 will kick in. The Nagpur facility which will come up by in calendar 2028 will have... Primarily the new IQ platform on the SUV side. Definitely Vision X which is not going to come in Chakan. We will probably need more capacity than we are planning in Chakan for Vision S, Vision T. So we will provide for that too and any other new products. We will also figure out which of the existing products need more capacity. We will have to work the cannibalization equation of new products over current products. We may add something at the Igatpuri new land that we are taking or we may add it in Nagpur. So that's something that we will work out by way of how to split and prepare for additional capacities on existing products. So, Nagpur Greenfield and if there are more questions, we can talk a little bit more about what will happen in Nagpur Greenfield. LCVs, I am not repeating, I have already spoken. Auto margins have been very robust and you see the 10.4% here without contract manufacturing, but this chart gives you a better feel of the same thing, which is the auto stand alone without contract manufacturing is 10.4, which is what you saw on the previous slide. 10 crores is what we made on the contract manufacturing in M&M. And the standalone as reported is 9.5, which of course comes down because there is a big element of contract manufacturing. On the EVs, as we've started doing, we made 175 crores end-to-end. In meal as a company, the EBITDA was 149. 27 of that was in M&M. And the total, as you see on this chart, is 175 crores. The PLI status is up here. So 9E, we have all variants approved. 9S, the top two packs are approved already. The balance are under approval and should come in by Q1. And B6 should come in by Q1 again, all variants. So basically by Q1, we should have all variants, all products with PLA approval. Trucks and buses, a quick look, we had a strong growth. We also look at the YTD market share, increased somewhat and we are both together at 6%. Last Mile Mobility, we continue our leadership. An exciting new launch happening tomorrow in Hyderabad. And do watch for that. We believe it will be a game changer. Some really very exciting breakthrough new design. And I think it will transform the penetration even more. We already are at 30% penetration. So just a quick look at the auto consolidated numbers. You've already seen that. So I'm skipping this. Farm, the volumes grew 23% in the quarter. We lost some market share. A lot of it was due to Swaraj Tractors completely running out of stock. And that's got recovered in January as well. So we are now at 44.1. So that's what you see here. The farm machinery Anish spoke about, we've seen very good turnaround. Last few months we've crossed 100 crores literally every month as an average. So it is a very strong momentum now that we're beginning to see. The core tractor margin here which is really the important parameter is at 21.2. Very good improvement over the like to like quarters but also very close to our best performance. This gives you the volatility of industry growth versus how the margins move in a band depending on the operating leverage. Anish has covered this so again Very strong standalone performance. We had to take impairments on a couple of subsidiaries, which we can talk about, which is what is showing a PBIT negative 7 and a PAT plus 7. With that, I'll hand over to Amar. Thank you.