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Dolat Capital Report
Mahindra and Mahindra Ltd. demonstrated a stable performance in Q3 led by better mix and cost cutting measures. Ebitda grew by 13% QoQ with margin at 12.8%. Ebit margin for automotive division expanded 55 basis points QoQ to 6.7 % and for farm equipment segment by 15 basis points to 16.6%.
Management indicated outstanding bookings of 266,000 plus (including XUV700 at 77,000 and Scorpio-N at 119,000) and mentioned cancellation rate is stable at 7-8%.
M&M remains the leader in utility vehicle with sports utility vehicle revenue market-share at 20.6%. We expect automotive margin in FY24 to see further improvement led by end of introductory pricing of XUV700 and Scorpio-N along with economies of scale.
We believe the stock to trade at a premium to historical multiple as the company moves higher to its guided return on equipment target of 18%.
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