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Above est.; 8% volume CAGR (v/s Jul’19) to 70.2k

Tractors (below est.) posts 17% CAGR (v/s Jul’19); UV (above est.) posts 8% sales CAGR (v/s Jul’19)

* M&M’s wholesales were above our estimates at 70.2k (v/s est 66.3k) and posted an 8% CAGR (v/s Jul’19) – up 37.5% YoY / -13.5% MoM.  M&M’s Tractors biz posted (below est.) a ~17% volume CAGR (v/s Jul’19) to 27.2k units (v/s est. 31.8k units), +7% YoY / -44% MoM. We have factored in 8% volume growth for FY22E, implying 3% residual decline or 32k units/month.

* UV saw an (above est) 8% volume CAGR (v/s Jul’19) to 40.4k (est 33.1k units); Domestic Passenger UV posted a 15% sales CAGR (v/s Jul’19), whereas Pickup/SCV posted an 8% volume CAGR. We estimate UV volumes to grow 30% in FY22E, with a residual growth rate of 11% or a monthly run-rate of 37.8k units.

* 3W posted a 32% volume CAGR decline (v/s Jul’19) to 2.1k units (v/s est. 975 units). We estimate 3W volumes to grow 53% in FY22E, with a residual growth rate of 28% or a monthly run-rate of 3.3k units.

* As per Mr Veejay Ram Nakra, Chief Executive Officer, Automotive Division, M&M, “More than 90% of our dealerships and workshops are now operational across the country. We have seen significant increase in activity levels, enquiries and as a result, sales across our product portfolio. While supply of semiconductors continues to be a global issue and we are doing everything to address it on priority, July has been an exciting month for us with two new product launches.

* We launched the Bolero Neo for the new age customer’s looking for a tough, powerful, go-anywhere authentic SUV. We also launched the Supro Profittruck range of SCV’s offering guaranteed higher mileage and payload and have on-boarded Both launches have received very positive initial response and we are confident of building on this in the coming months.”

* Commenting on the performance, Mr Hemant Sikka, President – Farm Equipment Sector, Mahindra & Mahindra Ltd.,stated “We have sold 25769 tractors in the domestic market during July 2021 with a growth of 5% over last year. Demand remained buoyant in July as crop sowing operations gained traction with monsoon picking up pace across all the regions.

* Easing of COVID curbs & robust farm incomes on account of record Rabi crop procurement has bode well for the rural economy. We continue to stay bullish on tractor demand in the coming months owing to revival of monsoon, hike in MSP of key Kharif crops & upcoming festival season. In the exports market, we have sold 1460 tractors with a growth of 55%.”

* The stock trades at core PE of 14.5x FY23E S/A EPS and 2.1x core P/B. Maintain Buy.

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