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Dolat Capital Report
Mahindra and Mahindra Ltd. demonstrated a stable performance in Q1. Ebitda grew by 20.3% QoQ to Rs 23.41 billion with 57 basis points margin expansion at 11.9%.
Ebit margin for automotive division increased by 13 bps QoQ to 5.6 % and for farm equipment segment expanded by 39 bps QoQ to 15.7 %.
In automotive segment, demand remains strong led by new launches in the sports utility vehicle segment. M&M has a healthy order book (140,000 vehicles, ex Scorpio N), however supply side challenges persist.
Newly launched XUV 700 is receiving encouraging responses (up 79,000 order backlogs, eight-nine order back-log). New Scorpio N, also clocked a record booking for one lakh units on the first day itself.
We expect auto margin to improve gradually from H2 FY23, on account of scale, model mix and cost savings. However, unfavorable dollar movement and price protection for the first 50,000 for XUV700 and 25,000 for the new Scorpio would be key constraints for margin expansion in FY23.
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