Mahindra & Mahindra Ltd. · NSE:M&M
Mahindra & Mahindra — Q1 F22 Earnings Presentation
45 slides from Mahindra & Mahindra's earnings presentation, Aug 6, 2021
Slide 1: Exchange filing cover letter
Mahindra & Mahindra Ltd. Mahindra Towers, Dr. G. M. Bhosale Marg, Worli, Mumbai 400 018 India Tel: +91 22 24901441 Fax: +91 22 24975081 REF:NS:SEC: 6th August, 2021 National Stock Exchange of India Limited BSE Limited "Exchange Plaza", 5th Floor, Phiroze Jeejeebhoy Towers, Plot No.C/1, G Block Dalal
Slide 2: Reigniting Value Creation
Reigniting Value Creation Press Meet Dr Anish Shah | 6 August 2021 1
Slide 3: Key Messages
KEY MESSAGES • Significant headwinds in Q1 … Wave 2 impacted rural (& our people) • Strong performance in Farm; good recovery in Auto • Mahindra Finance hit hard, TechM’s +ve momentum continues • Stringent fiscal discipline … on course for growth & returns 2 2
Slide 4: Headwinds
HEADWINDS Impact of Wave 2 Global issues % of working days (dealers): Commodity price inflation (Mar-20 to Jun-21) Auto : ~50% Base Metals : HR Steel 77%, Copper 86% Farm : ~75% Precious Metals : Platinum 47%, Rhodium 86% % of dealers closed (at peak in mid-May): Supply chain semi conductor shortage
Slide 5: Farm Performance
FARM PERFORMANCE Rs Cr PBIT Highlights (Standalone M&M) 1,081 59% ▪ Volume 52% YoY and 7% QoQ … strong momentum despite COVID Wave 2 682 ▪ Market share up 2.6% pts @ 41.8%* ▪ Commodity price … offset by cost management & price increases Q1 F21 Q1 F22 PBIT% 20% 20% ▪ All international subsidiarie
Slide 6: Auto Performance
AUTO PERFORMANCE Rs Cr PBIT Highlights (Standalone M&M) F 103 ▪ Market share improvement … UV and PV segments ▪ New product launches … strong booking pipeline ▪ Commodity price … offset by cost management & price increases (584) Q1 F21 Q1 F22 ▪ Managing supply chain issues PBIT% (29)% 2% Continued
Slide 7: MMFSL Performance
MMFSL PERFORMANCE Rs Cr Profit after Tax GNPA – deep dive (‘000s) (Standalone MMFSL) Stage 3 contracts 294 78 UF 156 (1,529) 92 124 Jun-21 Part payment O/s <50% Others received contract value Q1 F21 Q1 F22 Stage 2 402 326 8 68 GNPA% 9.2% 15.5% ▪ Stage 3 + Stage 2 … 420K contracts solvable P&L Provis
Slide 8: TechM Performance
TECHM PERFORMANCE Rs Cr Profit after Tax Highlights ▪ Large deal traction continuing w/ Healthcare and BPS 1,353 39% ▪ Sectors driving and on strong growth trajectory … 972 Communications, Hi-tech, Manufacturing ▪ TCV to double historical run rate … $815M ▪ Cloud, data, CX, AI key tech enablers Q1 F
Slide 9: Growth Gems
GROWTH GEMS Rs Cr Logistics Hospitality Real estate $ 720M 173% 5,364 $ 560M 87% $ 545M 273% Market cap Market cap Market cap 4,188 4,067 1,966 2,242 1,089 Jun 30, 2020 Aug 3, 2021 Jun 30, 2020 Aug 3, 2021 Jun 30, 2020 Aug 3, 2021 ▪ SCM rev. 114% YoY ▪ Pre-COVID level recovery in 4Q F21 ▪ 3 projec
Slide 10: Financial Summary
FINANCIAL SUMMARY STANDALONE M&M Rs Cr Operating PAT PAT after EI 934 F F 856 39 68 Q1 F21 Q1 F22 Q1 F21 Q1 F22 Robust operating performance despite headwinds 9
Slide 11: Consol Operating PAT
CONSOL OPERATING PAT CONSOLIDATED M&M Rs Cr As reported – incl. MMFSL Excl. MMFSL 1,299 F 473 F -1) -1) (20) (124) SYMC (562) SYMC (562) Q1 F21 Q1 F22 Q1 F21 Q1 F22 Capital allocation showing results, despite MMFSL impact (1- Excludes Ssangyong due to discontinued operations 10
Slide 12: Q1 F22 Press Meet: Automotive & Farm Sectors
Q1 F22 Press Meet Automotive & Farm Sectors RAJESH JEJURIKAR 6th August 2021 Executive Director, Auto & Farm Sectors
Slide 13: Gear Up… Accelerate to Fly
…RECAP GEAR UP… ACCELERATE TO FLY April’21 – June’21 AUTO FARM 1. Manage Cash, Costs 1. Being Fitter - Financial efficiency 1. Grow tractor market share 2. Manage Inventory 2. Strong Momentum of Brands 2. Technology: K2 Program, Horticulture, Krish-e 3. Enhanced Well being 3. Differentiated Brand St
Slide 14: Great Place to Work – Rank 2
GREAT PLACE TO WORK – RANK 2 Ranked no. 2 in “India’s Best Companies to Work For” 13
Slide 15: Gear Up - Update
GEAR UP - UPDATE MANAGE CASH, COSTS MANAGE INVENTORY ENHANCED WELL BEING ▪ Resilient margins in challenging ▪ Building stocks for festive season ▪ Vaccination drive: 95%+ employees received 1st dose environment ▪ Family Assistance Policy ▪ Debtors under control ▪ M-Protect COVID Plan to ease farmers
Slide 16: Highlights: Farm and Auto
HIGHLIGHTS Farm Auto Market Share Uptick New Products Launches 41.8% MS (Highest in 8 quarters) XUV700 on anvil, Bolero Neo, Supro Profit Truck FES Global Subs Performance Brands In Momentum ▪ Highest ever PBIT overall Strong booking pipeline in key brands ▪ MAgNA PBT positive Hisarlar Restructuring
Slide 17: Automotive Business
AUTOMOTIVE BUSINESS 16
Slide 18: Automotive – Standalone Segment Financials
AUTOMOTIVE – STANDALONE SEGMENT FINANCIALS Rs Cr Revenue PBIT 6,050 F F 2,039 (584) 103 Q1 F21 Q1 F22 Q1 F21 Q1 F22 17
Slide 19: Automotive – Sales and Stock Trajectory
AUTOMOTIVE – SALES AND STOCK TRAJECTORY Domestic Sales Volumes Quarterly System Stock* trend YoY Growth (indexed from Q1 F18) -78% -21% -7% +16% +188% 122.7 113.3 1,15,272 1,00,102 87,332 100.0 81.0 79,320 36.6 27,565 30.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 F21 Q2 F21 Q3 F21 Q4 F2
Slide 20: Brands in Momentum
BRANDS IN MOMENTUM 39k+ 10k+ Open Bookings Open Bookings (Waiting period ~10 months) (~2 months pipeline) Close to 30k Bookings in Q1 4k+ ~6k Open Bookings Open Bookings (~1 month pipeline) (~1.5 months pipeline) Bolero Pikup 19
Slide 21: New Launches – Bolero Neo
NEW LAUNCHES – BOLERO NEO 48Mn+ 30,000+ ~5,500+ Social Media Views Enquiries Bookings ▪ Launched on 13 July’21 ▪ Sub 10L pricing ▪ Only true blue SUV in Sub 4m. segment ▪ First in segment semi 4x4 technology ▪ Positive response from customers & dealers 20
Slide 22: New Launches – Supro Profit Truck
NEW LAUNCHES – SUPRO PROFIT TRUCK ~400 60,000+ Media Coverage in Registrations for Print Clips FB live events ▪ Launched on 7th July’21 ▪ Competitively priced ▪ Mileage and payload guarantee ▪ Very positive initial feedback from dealers 21
Slide 23: Hello XUV700
HELLO XUV700 Reveal – 2Q F22 97 Mn Video views 15.9L Social Media Engagement 40,000+ Enquiries before Reveal Segment-leading Technology Features 22
Slide 24: Farm Equipment
FARM EQUIPMENT TRANSFORM FARMING ENRICH LIVES 23
Slide 25: FES – Standalone Segment Financials
FES – STANDALONE SEGMENT FINANCIALS Rs Cr Revenue PBIT 5,319 59% 3,341 1,081 59% 682 Q1 F21 Q1 F22 Q1 F21 Q1 F22 24
Slide 26: FES – Sales and Stock Trajectory
FES – SALES AND STOCK TRAJECTORY Domestic Sales Volumes Quarterly System Stock* trend YoY Growth (indexed from Q1 F18) -22% +31% +20% +57% +48% 97,420 95,085 89,597 89,724 64,140 131.4 136.8 100.0 102.1 63.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 F21 Q2 F21 Q3 F21 Q4 F21 Q1 F22 F18 F1
Slide 27: FES – Performance Highlights
FES – PERFORMANCE HIGHLIGHTS Stability in Volatility Continued Domestic Leadership Industry Growth % PBIT % 63.4% 41.4% 38.9% 26.8% 41.3% 41.8% 20.4% 22.0% 20.3% 40.3% 19.3% 19.4% 17.6% 39.4% 39.1% 24.4% 23.4% 38.2% 38.0% 37.9% -6.0% -9.8% -9.0% -13.7% Q2 F20 Q3 F20 Q4 F20 Q1 F21 Q2 F21 Q3 F21 Q4 F2
Slide 28: Key Levers
KEY LEVERS Strengthen Core Domestic Business Brands, Products, Channel & Krish-e Domestic Farm Machinery Scale up focus Technology K2 Program, Global COEs. Precision Ag Global Growth from Consolidation to Growth 27
Slide 29: FES Global Businesses – From Consolidation to Growth
FES GLOBAL BUSINESSES – FROM CONSOLIDATION TO GROWTH MAgNA Sampo Focus on cost structure & Growth Billing Vol 13% ; MS 6.2% [<100HP] Positive PBT Launch of 5100 Series & Supply chain improvement MAM #4 in Japan Market Positive PBT Focus on structural cost Turkey Erkunt Traktor : Retail vol 36% , MS
Slide 30: FES Subs Turnaround: Highest Ever PBIT
FES SUBS* TURNAROUND : HIGHEST EVER PBIT PBIT Rs Crs 107 3 1 29 -69 4 Consecutive -650 +ve Qtrs -884 F19 F20 Q1 F21 Q2 F21 Q3 F21 Q4 F21 Q1 F22 * FES Global Subsidiaries + Gromax 29
Slide 31: Bold & Aggressive Growth Trajectory
30 BOLD & AGGRESSIVE GROWTH TRAJECTORY
Slide 32: Financials
Financials Press Meet Manoj Bhat | 6 August 2021 31
Slide 33: Financials (Standalone): Q1 F22
FINANCIALS (STANDALONE): Q1 F22 Rs Cr Revenue EBITDA Operating PAT (before EI) 11,763 F 5,589 1,632 F F 934 573 39 Q1 F21 Q1 F22 Q1 F21 Q1 F22 Q1 F21 Q1 F22 EI 29 (78) PAT (after EI) 68 856 32
Slide 34: Operating PAT (Before EI): Q1 F22
OPERATING PAT (BEFORE EI): Q1 F22 Rs Cr Q1 F21 Q1 F22 Q1 F21 to Q1 F22 F Domestic Farm 556 844 4 12 934 Domestic Auto (504) 87 591 Intl. Subsidiaries (9) (5) Group companies (4) 8 288 39 Total 39 934 PAT BEFORE EI (Q1 F21) DOMESTIC FARM DOMESTIC AUTO INTL SUBS - AUTO & FARM GROUP COMPANIES PAT BEFOR
Slide 35: Financials (Consolidated): Q1 F22
FINANCIALS (CONSOLIDATED): Q1 F22 Rs Cr Revenue -1) Operating PAT (Continuing operations, before EI after NCI) 19,172 60% 11,969 Fin Svcs 826 -1) 473 F (20) SYMC (562) Q1 F21 Q1 F22 Q1 F21 Q1 F22 Auto 2,153 6,317 EI (after NCI) (29) (49) FES 4,907 7,189 PAT (after EI)-1) (49) 424 Group Cos. 5,111 6,
Slide 36: Operating PAT (Before EI): Q1 F22 Consolidated
OPERATING PAT (BEFORE EI): Q1 F22 CONSOLIDATED M&M Rs Cr Q1 F21 Q1 F22 Q1 F21 to Q1 F22 Domestic Farm 553 856 (930) 278 Domestic Auto (529) 65 248 Intl. Subsidiaries-1) (248) - Ssangyong (562) F - 594 473 Group companies 100 378 303 MMFSL 104 (826) (20) PAT BEFORE EI DOMESTIC DOMESTIC INTL SUBS - GR
Slide 37: Strategic Priorities
STRATEGIC PRIORITIES Accomplished Current Focus Commitment F21 F25 Capital allocation Roadmap for ESG Lead ESG globally Maintain financial discipline Control costs Accelerate Core Growth 15% - 20% EPS growth • Leadership in Auto & Farm Pivot to Growth • Turnaround Mahindra Finance Deliver 18% ROE …
Slide 38: Roadmap for ESG
ROADMAP FOR ESG TEN COMMITMENTS Gold standard in Governance Project Hariyali Compliance and disclosures Plant 5 million trees/ year Water positive Nanhi Kali At Group level Educate 1 million girl child/ year Carbon pricing emphasis Women empowerment for internal busines decisions Support 1 million w
Slide 39: Fiscal Discipline
FISCAL DISCIPLINE Rs Cr A B C Entities with clear Quantifiable strategic Unclear path to path to 18% RoE impact profitability … exit Updates PMTC APF Metal Fabrication Volume w/ COVID impact, Gearing up for Battista fundamentals strong Dairy 37 22 31 Farm subs. (2) (17) (PAT) (103) Q1 F21 Q4 F21 Q
Slide 40: Leadership in Auto
LEADERSHIP IN AUTO 23 NEW PRODUCTS BY 2026 CORE SUV EV LCV • Thar … Total bookings 66K+ • 30,000+ e-3W sold • Market share leadership … -1) 50%+ market share in its category >50% in pick up segment (2 - 3.5T) • XUV 300 … Monthly booking 4-6K • 300 million EV kms since 2008 • Supro Profit Truck … Lau
Slide 41: Turnaround MMFSL
TURNAROUND MMFSL Resolve short term issues Augment business model • Sharp focus on collections • Reverse 80-90% of additional ECL provision booked in Reduce volatility in GNPAs 1Q F22 by Q3/ Q4 F22 Rationalize few micro segments and customer types • Drive growth of disbursements in higher performing
Slide 42: Path to 18% ROE
PATH TO 18% ROE F20 F21 F26 TARGET Automotive Farm Tech Mahindra Financial Services Hospitality Real Estate Logistics Unlisted Growth Gems Digital platforms 41
Slide 43: Appendix
Appendix
Slide 44: Definitions
DEFINITIONS Domestic Farm Domestic Auto Farm equipment business in M&M & Automotive business in M&M & domestic subsidiaries domestic subsidiaries Intl. subsidiaries Group companies International subsidiaries - Auto & Farm Listed and unlisted entities (excl. Auto and Farm) The numbers in this present
Slide 45: Segment Results: Q1 F22
SEGMENT RESULTS: Q1 F22 Rs Cr Revenue PBIT Q1 F21 Q1 F22 Q1 F21 Q1 F22 Automotive -1) 2,153 6,317 (734) 81 Farm equipment 4,907 7,189 613 1,188 Financial services 3,032 2,530 232 (2,185) Hospitality 294 394 (33) (16) Real estate 17 150 (24) (24) = Others 1,768 3,204 (12) 157 Le