Mahindra & Mahindra’s Q4 FY2024: Strong Growth Amid Margin Pressures
2min read Mahindra & Mahindra (M&M), India’s leading automotive conglomerate, reported a robust financial performance for the quarter ended March 31, 2024 (Q4 FY2024), though not at the levels initially suggested by the figure of ₹24.37 billion PAT. The correct standalone PAT for the quarter was ₹2,038 crore, marking a 32% year-on-year (YoY) rise compared to ₹1,549 crore in Q4 FY2023. This growth underscores the company’s resilience in key markets, even as it faces headwinds such as rising input costs and electric vehicle (EV) transition challenges.
Key Performance Drivers
Revenue Growth:
Revenue rose 12% YoY to ₹25,436 crore, driven by strong sales across SUVs, tractors, and logistics services. The Auto segment’s SUVs, led by the XUV700 and XUV500, contributed significantly, with revenue market share expanding to 20.4%.Margin Expansion:
EBITDA surged 22% YoY to ₹3,446 crore, with PBIT margins improving 170 basis points to 8.8% in Auto and 150 basis points to 17.3% in Farm Equipment. Operational efficiencies, pricing power, and cost controls were key drivers.Tractor Dominance:
Despite a 20% YoY dip in tractor sales to 71,039 units (due to seasonal factors), M&M maintained its leadership with a 41.6% market share, the highest in over a decade.
Challenges and Risks
- EV Transition Costs: EVs, though growing in volume, continue to dilute margins by 40–50 basis points due to higher production costs. Battery EV sales in Q4 FY2024 were around 7,000–7,500 units, up from prior quarters but still a small fraction of total sales.
- Sequential Declines: PAT fell 31% sequentially from ₹2,964 crore in Q3 FY2024, reflecting lower tractor volumes and seasonal demand fluctuations.
- Competitive Pressures: The Auto segment faced margin headwinds from pricing wars and rising input costs, particularly in the light commercial vehicle (LCV) segment.
Long-Term Outlook and Investment Implications
M&M’s FY2024 full-year results were equally impressive, with standalone PAT reaching ₹10,718 crore (48% YoY growth) and consolidated PAT at ₹11,269 crore (10% higher than FY2023). These figures highlight the company’s ability to balance growth in core businesses (SUVs, tractors) with strategic investments in logistics, real estate, and EVs.
Key Takeaways for Investors:
1. SUV Leadership: The Auto segment’s dominance and rising SUV demand in India and emerging markets remain a key growth lever.
2. Tractor Resilience: Despite short-term dips, M&M’s tractor business benefits from government support for agriculture and rural infrastructure.
3. Margin Management: The company’s focus on cost optimization and pricing discipline will be critical to offset EV-related margin pressures.
4. Dividend Payout: A dividend of ₹16.25 per share for FY2023 (a 41% increase) signals strong cash flow and shareholder-friendly policies, though FY2024’s payout is yet to be announced.
Conclusion
Mahindra & Mahindra’s Q4 FY2024 results reflect a company navigating a complex landscape with mixed success. While PAT growth was robust at 32% YoY, the ₹2,038 crore figure (not ₹24.37 billion) underscores the importance of accurate data interpretation. Investors should focus on M&M’s strengths in SUVs and tractors, its disciplined capital allocation, and its progress in EV adoption. However, margin pressures and competitive dynamics in the Auto sector require close monitoring.
With a 5-year average ROE of 19.9% and a 10% YoY rise in consolidated PAT, M&M remains well-positioned to capitalize on India’s growth story. For long-term investors, the stock’s P/E of 18x (versus a 5-year average of 22x) offers value, provided the company can sustain margin expansion and EV cost reductions.
In summary, M&M’s fundamentals remain strong, but its ability to balance short-term challenges with long-term opportunities will determine its trajectory in FY2025 and beyond.
