M&M earnings revenues stood at 15% YoY, on strong bookings seen for SUVs and price hike

M&M reported 2QFY22 net revenue of Rs. 133bn, up 15%, YoY, EBITDA margins grew at 12.5%, and PAT stood at Rs. 17bn which was impacted due to an impairment of Rs. 2.5bn. M&M reported a loss of c32K units of SUV volumes owing to the semiconductor shortage in 2Q FY22 and expects the shortage to ease from Q3 onwards and would help ramp up production.

The company has overall bookings of 160K+ units for SUVs and sees strong bookings for its new launches. The average selling price for the automobile business was up 12% QoQ, supported by price hikes and better mix. Thar has received 50% bookings for the auto transmission while the XUV 700 had nearly three fourths of the bookings for the top variants. Tractor ASP was up 6% YoY largely led by ~8% increase in prices over the last year. The international farm business profitability remains intact.  
The tractor demand in the festive period failed to support the growth. The company still expects festive sales to continue through November, however, expects domestic industry growth to be flat for the rest of the year.

In the quarter, Porter now holds a valuation of cUSD500m (up nearly 4x in less than 24 months). M&M aspires to achieve a 15-20% revenue CAGR by 2025, grow farm revenues by 10x by 2027, become the leader in the target SUV segment as well as the e-SUV segment, generate a ROCE of more than 18%; and reduce material costs and fixed costs by c300bp YoY over the medium term. 

The company has provided visibility on product launches across the farm with 15 new products, SUV with 13 new products and pick-up with 17 new product segments over the next 4-6 years. Electric powertrains will be a key focus across SUVs (eight new products), LCVs (eight new) as well as 3Ws – and aim to be the largest player in each segment. M&M, in competition with its peers, also plans to seek a new partner or on-board an investor to accelerate its EV business plans.