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M&M reported decent Q1 FY24 numbers wherein the topline was reported at ?240 bn, a growth of 22.7% yoy and 6.6% qoq. Volumes rose by 10% yoy and realizations went up by about 11.2% yoy. Automotive division revenues came in at ?166 bn, an increase of 21% yoy led by success of new launches –Thar, Bolero Neo, XUV 7oo, Scorpio variants and XUV 3oo & 4oo. M&M started rapidly catering to the order backlog as chip shortage issue softened. Automotive segment reported strong EBIT margins, which rose by 40 bps qoq, (180 bps yoy) to 7.5% due to positive operating leverage, stable commodity basket and model mix. Tractor margins came in strong at 17.5% which were 40 bps up qoq and 150 bps up yoy. Overall EBITDA margins therefore came in at 13.4% (100 bps jump qoq and 150 bps yoy). Coupled with higher other income, PAT came in 89% up yoy and 11.5% qoq at ?27.4 bn.

SUV remains the bright spot, to continue with its good run

M&M witnessed 32% yoy and 1% qoq growth in the SUV segment volumes during the quarter. The company has received an excellent response for the new Scorpio N (incl. Classic) with 117K open bookings since its launch. The Thar and XUV 7oo launches are still having huge order book of 10K and 8K per month respectively, though these models have long waiting periods. Neo Bolero was launched in July 2021 which already has received strong order bookings (9K monthly bookings for the entire Bolero family) and has made robust inroads into Southern markets where the earlier Bolero model was not having a wide presence. Also XUV3oo and 4oo combined have got a very strong response with 6K demand per month, while XUV 4oo and 3oo open bookings stood at 11K units p.m. The total order bookings stood at 281K currently. With this, the company was able to increase its SUV revenue market share at 20.2% from 19.6% qoq and staying at #1 position. Also the company plans to launch its EV and ICE variants (4 door and 5 door Thar) this fiscal along with several other new products such as BE.05, XUV.e9 and BE-RALL-E for the first time in India. From existing ICE capacity of 39K p.m, the company plans to expand it upto 49K p.m as FY 24 exit capacity. M&M plans to launch 5 new SUVs this year as supply constraints are easing (impact of just 7K units in the SUV + pick up segment during Q1). We expect SUVs to register 20%/15% growth in FY24E/FY25E respectively.

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