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M&M reported decent Q4 FY24 numbers wherein the topline was reported at ?254 bn, a growth of 12.7% yoy and flattish qoq. Volumes rose by 9.3% yoy and realizations went up by about 3.1% yoy. Automotive division revenues came in at ?199 bn, an increase of 20% yoy led by success of Thar, Bolero, XUV & Scorpio families with ~220K order book. Automotive segment reported strong EBIT margins, which rose by 170 bps yoy and 50 bps qoq to 8.8% on positive operating leverage, stable commodity basket and model mix. Tractor margins came at 15.8% which was 30 bps up qoq and lower 60 bps yoy as lower monsoons and unseasonal rains led to fall in volumes but margins improved qoq on lower RM basket costs. Overall EBITDA margins therefore came in higher at 14% (flattish qoq and 160 bps up yoy). Lower other income coupled with higher tax rate, led PAT to come in 4.3% up yoy at ?21.6 bn. On a sequential basis, the growth was 12% lower. Overall results were quite decent despite tractor business being on weak wicket.

SUV demand remains strong on robust demand for XUV 3XO

M&M witnessed 28% growth in the SUV segment volumes during the year. The company has received an excellent response for the new XUV 3XO with 50K bookings on the opening day. Scorpio N (incl. Classic) with 86K open bookings since its launch (~17 k per month) is another recent big success. The Thar and high cost XUV 7oo are still having huge order book of ~7K and ~8K each per month respectively, as their waiting periods are reducing now. Neo Bolero was launched in July 2021 which still has received strong order bookings (~9.5K monthly bookings for the entire Bolero family). With the smooth phasing out of XUV 3oo, the company has managed to bring in XUV 3XO at attractive price point. With this, the company was able to increase its SUV revenue market share at 20.4%, 130 bps up yoy and 40 bps up qoq. Competition is intensifying in the hot SUV segment with MSIL launching an array of launches, thus M&M conceding its #1 position to MSIL. M&M might turn once again market leader as the company plans to launch its EV and ICE variants (recent XUV 3XO and 5 door Thar) in CY24. From existing ICE capacity of 39K p.m by FY23 end, the company has ramped it upto 49K p.m by FY 24 end, which will be scaled up further to 64K and 72K by the end of FY25 and FY26 respectively. SUV as an industry is attracting bulk of the PV demand now (>50%) and since M&M is driving substantial part of it, we expect this segment to register 19%/15% growth in FY24E/FY25E/FY26E respectively. M&M plans to launch 9 ICE SUVs by 2030.

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