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Good overall performance: M&M standalone revenue from operations grew by 16.8% YoY/4% QoQ, mainly driven by strong Automotive sales as well as premium mix of products in the Farm Equipment (FE) segment. Amongst segments, Automotive revenue grew by 25.5% YoY/0.9% QoQ to Rs 18,577 Cr, consequently, Farm Equipment (FE) revenue grew by 7.3% YoY/13.8% QoQ to Rs 6,735 Cr. The strong operational performance led PAT to grow by 60.6% YoY to Rs 2,454 Cr.

Sequential improvement in margin: Its gross profit was reported at Rs 6,223 Cr, up by 19.5% YoY/4.9% QoQ with a margin of 24.6% which improved by 56bps YoY/21bps QoQ. The softer commodity prices and rich mix of products drove the gross profit and margin higher. Consequently, EBITDA grew by 15% YoY/10.3% QoQ to Rs 3,236 Cr while margin was in a mixed trend as it expanded by 73bps QoQ while it contracted slightly by 20bps YoY to 12.8%.

Consistent Automotive business: Auto division volume continued to be strong as it grew by 20.2% YoY and remained flat sequentially to 211,443 units. Strong Utility Vehicle (UV) and 3-Wheeler sales drove the realization higher by 4.5% YoY/1.2% QoQ to Rs 878,567/unit. Subsequently, the strong demand in the UV category led the company to improve its revenue market share by 40bps YoY/20bps QoQ to 21%. Its EBIT was reported at Rs 1,553 Cr down by 7.8% QoQ while margin contracted by 70bps QoQ to 8.3%.

Mixed FE performance amid lower sales: Its Tractor volume declined by 3.9% YoY to 101,672 units, impacted by the high base of last year as well as mixed monsoon season. Consequently, EBIT declined by 4.7% over last year to Rs 1,042 Cr with a margin of 15.5% while core Tractor margin remained steady at 16.9%. Despite decline in volume, realization improved by 11.6% YoY to 662,380/unit and improved its market share by 80bps YoY/20bps QoQ.

Outlook & Valuation: M&M continues to post healthy volume across its Auto Division mainly led by the UV and 3-wheeler category which has led to consistent growth in its revenue and realizations. Going ahead, the management expects its UV portfolio to outpace the industry growth which shall result in revenue and margin expansion as well as maintain its leadership position in the revenue market share. Additionally, market share growth, new products and improvement in segmental profitability in FE business shall prove to be positive for the company. Further, the monetization of its EV business could turnout to be the next leg of growth for the company. Factoring this, we estimate its revenue/EBITDA/PAT to grow at a CAGR of 15.1%/18.5%/26.9% over FY23-FY26E. We maintain our Buy rating with a revised target price of Rs 1,998 (15x of

Concall & other key highlights: 1) Its order book in the UV category was ~226,000 units with ~91.6% accounting for like Thar, XUV700 and Scorpio-N. 2) The company expects its UV volume grow in mid-high teens for FY25. 3) Its LCV (<3.5T) market share is up by 310bps to 49.6% and Electric 3-wheeler market share stood at 54%. 4) Farm Machinery revenue was up by 28.5% YoY to Rs 221 Cr. 5) The management has stopped accepting XUV300 booking, the mid -cycle XUV300 refresher in is expected to be launched in Q1FY25. 6) The management aims to launch 5 Door Thar by mid CY24.

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