MAHDY - Mahindra & Mahindra Ltd. (MAHDY) Q3 F24 Analyst Meet (Transcript)

2024-02-14 21:18:07 ET

Mahindra & Mahindra Ltd. (MAHDY)

Q3 F24 Analyst Meet Conference Call

February 14, 2024 5:30 AM ET

Company Participants

Anish Shah - Group CEO and MD

Rajesh Jejurikar - ED and CEO, Auto and Farm Business

Manoj Bhat - Group CFO

Conference Call Participants

Nitij Mangal - Jefferies

Presentation

Anish Shah

Hi, good afternoon, everyone. We are a couple of minutes past so we'll start now. And let me just take you through the highlights of the quarter then we'll have Rajesh come in and talk about the auto and farm businesses. And Manoj will talk a little more about the financials.

Overall, a very solid operating performance excluding TechM. You've seen the TechM results. It's getting on a path for recovery and a turnaround now but there's more work to be done, obviously a lot more work there. But besides that, auto continues on a very strong momentum, gaining market share in SUV, up at 21% now from a revenue standpoint number one in market share and at 49.6% in LCV. So very strong performance on both of those fronts. Farm, while the industry has been tough and we expect it to be down 5% to 6% for this year, the business has actually gained 80 basis points of market share and at the level that we are at, at about 40% that again is something that is very strong performance by the farm team.

Mahindra Finance, turnaround is very much on track. GS3 is at an all-time low of 4%. You've seen the results from Mahindra Finance that were published. The credit costs are on track in terms of what has been committed. Strong disbursement growth, sequential NIMs are up. So overall, the business is on a very solid track and TechM is the sore spot for this quarter. Profit is down 61% due to a number of factors which were discussed in the TechM call but it's one where with the new CEO coming in, we are seeing very good signs of a turnaround. A number of things have been put in place already. So we shall expect much better results from TechM as we go forward. In addition, our growth gem value unlock continues. We have launched India's largest renewables InvIT and that put Susten in great shape to be able to deliver the growth that we want. We have got a large number of investors and we had to say no to many of them as well. But as the business grows, we have the InvIT to be able to fund a large part of that growth in terms of the strategy we have outlined.

Susten has performed very well this year. It is in fact much higher than the track we had outlined for it. We had talked about a 5x growth in Susten in five years. We are now looking at that and saying should that be 10x or should that be somewhere between 5 and 10. Second from our last mobility standpoint, we have got a second investment. The first was IFC. The second is NIIF's India-Japan fund and this comes in at a valuation of INR 6, 600 cr. 10% higher than the first one, again driven by strong performance in the business. As a result, overall, consolidated PAT is up 34%. This does exclude two items from last year. One was the Susten gain that we had as a one-time when Ontario teachers came in and took the 30% stake and the entire company was revalued. And second is the Trucks and Buses Impairment that was taken last year in the third quarter as well. So, you see it on this slide here where revenue is up 15% for the quarter, 17% year-to-date. And from a PAT standpoint, you see the net impact of the two offsetting parts, the plus that we had last year from the Susten gain and the negative that we had last year from the Trucks and Buses Impairment on a net basis was a gain of INR 693 cr. Without that, it's up 34% on a year-to-date basis, up 33%.

You talk about the three elements of a strategy, capitalizing on market leadership in auto and farm and you see that in the numbers here beyond market share as we look at the profit increases up 49% despite the slowdown in the farm industry. That's driven by market share, margin performance in auto and it's also setting the business up for the future with brand investments as well as product launches that have been done in farm that will be done in auto for EV. TechM and Mahindra Finance, we talked earlier Mahindra Finance is on a good track now. TechM has to get on that track and start its turnaround journey and Growth Gems while you see the numbers here, profits are up 3.3x but I'm a little less focused on these numbers, more focused on the value creation from the Growth Gems that we will see and we again talked about LMM and InvIT, life spaces I'd highlight is doing on a very strong track in terms of sales and on a 5x growth path that we've set for it....

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