Company & Equity

Research Analysis

Mahindra & Mahindra

Ltd.
Submitted By-

Anannya Sinha(12305527)
Anamika Kumari(12302535)
Ankit Singh Chauhan(12312267)
Bittu Kumari(12301803)
Dayna Dhali(12314169)
Automobile Industry
Overview
The automobile industry in India is a Key Players:
significant and rapidly growing sector.
Here’s an overview: Maruti Suzuki: Dominates the
passenger car segment.
Size and Growth Trends
Tata Motors: A major player in
Market Size: The Indian automobile market both passenger and commercial
is projected to reach approximately USD vehicles.
126.67 billion in 2024 and is expected to
grow to USD 187.85 billion by 2029, with a Mahindra & Mahindra: Known
compound annual growth rate (CAGR) of for its SUVs and commercial
8.20%. vehicle

Vehicle Production: India ranks as the Hyundai: A significant player in

fourth-largest car manufacturer globally. The the passenger car market.
industry is driven by rising disposable
Hero MotoCorp: Leads the two-
incomes, a growing middle class, and wheeler segment.
increasing urbanization.
Bajaj Auto: Prominent in both
two-wheelers and three-wheelers.
Historical Development

Early Innovations (Late 19th - Early 20th Century)

Post-War Expansion (1945 - 1970s)

Globalization and Competition (1980s - 2000s)

o Economic Factors: The rise of Japanese automakers like Toyota and Honda introduced competition, leading to improvements in
quality and efficiency.
o Technological Factors: The introduction of electronic fuel injection, hybrid vehicles, and advancements in manufacturing
technologies.
o Regulatory Factors: Stricter emissions and safety standards globally, including the Kyoto Protocol’s impact on automotive
emissions.
o Social Factors: Growing environmental awareness led to increased demand for fuel-efficient and environmentally friendly
vehicles.
PESTLE Analysis
Political: Regulations, government incentives, and
trade policies significantly influence the automotive
industry, affecting manufacturing, costs, and market
access.

Economic: Economic cycles, raw material costs,

interest rates, and fuel prices impact vehicle
demand, production costs, and overall profitability.

Social: Shifting consumer preferences,

demographics, and environmental awareness drive
changes in vehicle design, market demand, and
sustainability practices.
Technological: Technological advancements in EVs,
autonomous vehicles, and smart technology are
transforming the industry and creating new
opportunities.
Legal: Compliance with safety and environmental
regulations, intellectual property protection, and
labor laws are crucial for legal and operational
aspects of the industry.
Environmental: Addressing environmental impacts,
managing resources sustainably, and adapting to
climate change policies are key to meeting
regulatory requirements and consumer expectations.
 Industry Future
Prospect
The global automotive industry size is calculated at USD 4,359.98 billion in 2024 and is
expected to reach around USD 6,678.28 billion by 2032, growing at a CAGR of 5.66%
from 2024 to 2032.

EV and Global Expansion: M&M’s focus on electric vehicles and international expansion
provides strong growth opportunities.
Diversification: The company’s diversification into new sectors and ongoing investments in
R&D support long-term growth and innovation.
Sustainability: Alignment with sustainability trends and regulatory requirements positions
M&M favorably in a changing market.
Potential Disruptors
1. New Business Models: The rise of shared mobility services,
such as ride-hailing and car-sharing, is changing how people
view car ownership. This shift could disrupt traditional car
sales models.
2. Technological Innovations: AI, machine learning, and
advanced manufacturing technologies are revolutionizing
vehicle design and production.
3. Supply Chain Challenges: The industry faces ongoing supply
chain issues, particularly with the availability of critical
components like semiconductors and batteries. Ensuring a
steady supply of these components is crucial for the continued
growth of EVs.
4. Regulatory Changes: Governments are continuously
updating regulations related to emissions, safety, and data
privacy. These changes can significantly impact how automotive
Introduction of the Company
Mahindra & Mahindra Limited (M&M) is a leading Indian multinational corporation
headquartered in Mumbai, Maharashtra. Established on October 2, 1945, by brothers
Jagdish Chandra Mahindra and Kailash Chandra Mahindra, along with Malik Ghulam
Muhammad, the company originally started as a steel trading business named Mahindra &
Mohammed. After the partition of India in 1947, the company was renamed Mahindra &
Mahindra.

Industry: Automotive, Farm Equipment, IT, Financial Services, and more.

Global Presence: M&M operates in over 100 countries with manufacturing facilities in
India, the USA, China, and several European nations.

Products: The company produces a wide range of vehicles, including SUVs, commercial
vehicles, and tractors. It is the world’s largest manufacturer of tractors by volume.

Revenue: For the fiscal year 2024, M&M reported a revenue of ₹139,078 crore
(approximately USD 17 billion).

Employees: The company employs over 140,000 people globally.

Market Position
• Mahindra & Mahindra holds a strong market position, particularly
in the automotive and agricultural sectors. The company has
diversified its product portfolio to include cars, trucks, SUVs, and
electric vehicles, catering to a broad customer base both
domestically and internationally.

• As of September 2024, Mahindra & Mahindra has a market cap of

$37.06 Billion, making it the world's 552nd most valuable
company by market cap. Mahindra & Mahindra Financial Services
(M&M Fin. Serv.) has gained 3.26% in the stock market on
September 3rd, 2024, outperforming the sector by 2.12%.

• M&M has expanded its footprint globally with manufacturing

facilities and operations in multiple countries, including the USA,
China, and several European nations. This global presence helps
the company tap into diverse markets and reduce dependency on
Competitive Advantage

• Diverse Product Portfolio: M&M’s extensive range of products,

from utility vehicles to electric cars, allows it to meet various
customer needs and preferences.

• Strong Brand Recognition: The company has built a robust

brand reputation over the years, known for quality and
reliability. Global Presence: With manufacturing facilities and
operations in multiple countries, M&M can leverage global
market opportunities and mitigate regional risks.

• Innovation and Sustainability: M&M is committed to

innovation, particularly in electric vehicles and sustainable
practices. The company aims to become carbon neutral by
2040, showcasing its dedication to environmental
responsibility.
 Business Strategies
Market Research and Customer Segmentation: M&M conducts extensive market research to
understand customer needs and preferences, allowing for effective customer segmentation and
targeted marketing.

Brand Positioning and Customer Experience: The company focuses on strong brand positioning
and enhancing customer experience through quality products and services.

Digital and Traditional Marketing: M&M utilizes a blend of traditional and digital marketing
channels, including social media and content marketing, to engage a wider audience and
strengthen its market presence.

Strategic Partnerships: The company forms strategic partnerships to enhance its technological
capabilities and expand its market reach.

Sustainability Initiatives: M&M’s commitment to sustainability is evident in its goal to become

carbon neutral by 2040 and its various corporate social responsibility (CSR) initiatives.
Ratios

Book Value Per Share: This represents the value of the company’s equity on a per-share basis. The Compound Annual Growth Rate (CAGR)
over 3 years is 14.7%, and over 5 years is 8.7%. The values have increased from 288.9 in March '20 to 457.9 in March ‘24.

ROA % (Return on Assets): This measures how efficiently a company uses its assets to generate profit. The values have increased from 2.63%
in March '20 to 12.78% in March ‘24.

ROE % (Return on Equity): This indicates how effectively a company uses shareholders’ equity to generate profit. The CAGR over 3 years is
198.6%. The values have fluctuated, peaking at over 200% before settling at 7.9% in March ‘24.

ROCE % (Return on Capital Employed): This measures a company’s profitability and the efficiency with which its capital is employed. The
CAGR over 3 years is 24%. The values have varied, starting at 13.26% in March '20 and ending at 6.9% in March '24.These indicators provide
a comprehensive view of the company’s financial health and performance over time.
• The profitability margin has shown some • Current Ratio: This ratio indicates a company’s ability to
fluctuations but generally remains strong, pay off its short-term liabilities with its short-term assets.
The values range from 1.4% to 1.4%.
peaking in March ‘24.
• Quick Ratio: Similar to the current ratio but more
• There has been a steady increase in EBIT stringent, it excludes inventory from current assets. The
margin, indicating improved operational values range from -3.1% to 1.1%.
efficiency.
• Dividend Payout to NP (Net Profit) %: This shows the
percentage of net profit paid out as dividends. The graph
• Significant improvement in PBT margin over the
includes positive values up to 1%.
years, reflecting better profitability before tax.
• Earning Retention Ratio: This indicates the percentage of
• The net profit margin has seen substantial net earnings retained in the company rather than paid out
growth, especially from March '21 onwards, as dividends. The values range from 10.77% to 81.15%.
indicating better overall profitability.
• Cash Earning Retention %: This measures the percentage
of cash earnings retained in the company. The values range
• This metric shows how efficiently the company is from 88.33% to 85.73%.
using its assets to generate revenue. The exact
trend is unclear due to the obscured value for
March '24.
Analysis of Equity
Research
CMP: ₹ 2,375
Target: ₹ 2,915 (23%)
Target Period: 12 months

•Overall Upward Trend: Both

indices show an overall upward
trend, indicating positive growth
over the observed period.
•Volatility: The Nifty index appears
to be more volatile, with more
pronounced fluctuations compared
to the MM index.

Mahindra and Mahindra's stock is likely to appreciate by 23% from its current price of ₹2,375 to ₹2,915
over the next 12 months. Given that the expected return exceeds 15%, the stock would typically receive
a "Buy" rating according to ICICI Direct rating system. This indicates a strong recommendation to
purchase the stock, as it is expected to provide a substantial return within the specified time frame.
Investment Thesis

Strengths: Weaknesses:
Leading market Economic
position, sensitivity,
diversified potential
portfolio, supply chain
strong R&D. issues

Opportunities
Threats:
: Growth in EV Regulatory
market, challenges,
international competitive pre
expansion. ssures.
Valuation

• P/E RATIO - Decreasing trend suggests that the company’s earnings are expected to grow,
making the stock potentially more attractive over time.
• EV/EBITDA - A decreasing trend indicates improving profitability and potentially better
value for investors.
• EV/NET SALES - A lower ratio over time suggests that the company is generating more
sales relative to its valuation, which can be a positive indicator for investors.
• MARKET CAP/SALES - A decreasing trend indicates that the market is valuing the
company’s sales more favorably over time.
• PRICE TO BOOK VALUE - A lower ratio suggests that the stock is becoming more
attractively valued relative to its book value.
Events &
Risk
Reports healthy Q4FY24. Margins came in robust at 12.9%
The company’s robust margin of 12.9% in Q4FY24 highlights strong
operational performance and effective cost management, signaling
financial health and efficient operations.

Key Risk:

(i) Lower than anticipated operating leverage gains

Operating Leverage: Investors should watch for any signs that the
company might not achieve the anticipated gains from its sales growth,
which could impact profitability.

(ii) Unforeseen delay in new product launches across ICE & EV

domains
Product Launches: Delays in new product launches in ICE and EV
segments are a significant risk that could affect future revenue and
Analysis of Buy Sell Hold
Ratings
ICICI Direct endeavors Buy: >15%
to provide objective Investors are advised to purchase this stock, anticipating a
opinions and return of over 15% within the performance horizon
recommendations. (typically two years).
ICICI Direct assigns
ratings to its stocks Hold: -5% to 15%
according -to their Investors are advised to hold onto this stock, as the
notional target price potential returns are moderate, but not significant enough
vs. current market to warrant buying or selling.
price and then
categorizes them as Reduce: -15% to -5%
Buy, Hold, Reduce and Investors are advised to consider reducing their holdings,
Sell. The performance selling part of their position to mitigate potential losses.
horizon is two years
unless specified and Sell: <-15%
the notional target Investors are advised to sell this stock to avoid substantial
price is defined as the losses.
 Mahindra & Mahindra to introduce 7
Electric Vehicles by 2030.

Mahindra & Mahindra announced plans to introduce seven

battery electric vehicles by 2030, starting new models from
2025. The company aims to increase its EV production
capacity, focusing on cost effective LFP technology. The
automaker is also exploring hybrid powertrain options and
has secures a supply agreement with Volkswagen for
electric component.
Earlier this year, M&M signed an agreement with Volkswagen Group
for the supply of certain electric components and unified cells from
Volkswagen’s MEB platform for Mahindra’s electric platform
INGLO Both companies continue to explore potential further
collaborations.

INGLO – In for India and GLO for Global

MEB - Modular electric drive kit – known as the MEB – offers you everything you could wish for from the electric mobility of the future.
That's because this newly developed vehicle platform is designed specifically for electric cars.
Merger & Acquisition
Activity
IMPACT ON M&M
Beginning with new models starting in
2025. In the current fiscal year, M&M aims
to increase its monthly production capacity
by 15,000 units, with 10,000 of those being
EVs. This will raise its total monthly
capacity to 64,000 units.
 References

HISTORICAL DEVELOPMENT - https://www.statista.com/statistics/608392/automo

bile-industry-domestic-sales-trends-india/

FUTURE PROSPECT - https://www.fintechfutures.com/techwire/automotive-indust

ry-size-expected-to-reach-usd-6678-28-bn-by-2032

EQUITY REPORT - Mahindra & Mahindra (icicidirect.com)

NEWS - https://economictimes.indiatimes.com/industry/renewables/mahindra-m
ahindra-to-introduce-7-electric-vehicles-by-2030-starting-in-2025/articleshow/11
2190305.cms?from=mdr

M&A - https://economictimes.indiatimes.com/industry/renewables/mahindra-ma
hindra-to-introduce-7-electric-vehicles-by-2030-starting-in-2025/articleshow/112
190305.cms?from=mdr