- 17 May 2024
- ICICIdirect Research
M & M REPORTS HEALTHY Q4FY24, GUIDED FOR AGGRESSIVE CAPEX SPEND AND PRODUCT LAUNCHES TILL 2030
News: At M&M, on the standalone basis, topline for the quarter came in at ₹25,109 crore (up 11% YoY) with automotive segment volumes growing 14% YoY at 2.16 lakh units and tractor sales volume at 0.72 lakh units (down 20% YoY). EBITDA in Q4FY24 came in at ₹3,240 crore with corresponding EBITDA margins at 12.9% (up 10 bps QoQ). Resultant PAT for the quarter stood at ₹2,038 crore (up 32% YoY). Automotive segment EBIT margins improved further to 8.8% (up 50 bps QoQ) while Farm Equipment segment margins improved to 15.8% (up 30 bps QoQ). It generated healthy CFO to the tune of ~₹ 11,500 crore in FY24 with capex spend pegged at ~₹ 5,000 crore. It also declared a dividend of ₹ 21/share for FY24.
Views: The margin performance at the company surprised positively despite lower share of tractor sales volume in the overall mix for the quarter. On the SUV side its orderbook stands healthy at 220k units (including 50k units of XUV 3XO) with aspiration to grow mid to high teens in FY25E amidst domestic PV industry growth pegged at <5%. In the SUV space its present booking run rate is still ahead of monthly billings. The company has outlined an aggressive capex spend of ~₹ 31,000 crore over FY25-27E over auto and farm segments primarily at product development and capacity expansions. It also includes ₹ 12,000 crore marked for the PV-EV space (one of the highest in domestic space). It is looking at aggressive product launches at 9-ICE SUV’s (6 new ICE models, 3 refreshes incl. XUV 3XO), 7 BEV’s and 7 LCV’s (5 ICE, 2 EV) by 2030. With capital efficiency to the core (RoE at ~20% in FY24), the company is well poised for more profitable growth going forward. We have a positive view on the stock.
Impact: Positive