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Eye on M&M's 15-20% growth target in farm equipment biz, EV vision bold: Nomura

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Eye on M&M's 15-20% growth target in farm equipment biz, EV vision bold: Nomura

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Kapil Singh, auto analyst at Nomura, on Wednesday, said that the vision led by the management of Mahindra and Mahindra (M&M) on electric vehicles (EVs) was bold. He also said that traditionally, farm equipment business is seen as a slow growth one with around 8 percent CAGR, but the management's target of 15-20 percent growth in the segment looks interesting.

Kapil Singh, auto analyst at Nomura, on Wednesday, said that the vision led by the management of Mahindra and Mahindra (M&M) on electric vehicles (EVs) was bold.

Mahindra & Mahindra Ltd (M&M) reported numbers better than expected and the management also said that the chip shortage issue is getting better. The auto major, on November 9, reported revenue of Rs 13,305 crore for the July-September period, up 14.8 percent on a year-on-year (YoY) basis. The company posted a net profit of Rs 1,929 crore for the quarter ended September, up more than three times on a year-on-year basis.
“The most interesting thing was the vision laid out by the management (M&M) which we thought was quite bold and clear in terms of what they are setting out to do. Traditionally, we see the farm business as a slow-growth business with 8 percent CAGR, but they have laid a vision of 15-20 percent growth in that segment with a lot of innovations that they are targeting especially in the farm machinery segment,” Singh said, in an interview to CNBC-TV18.
According to him, the vision is bold to target the number one position in SUVs and e-SUVs with the number of products coming in there.
On OEMs, he said, “Nearly 50 percent of the market has become sports utility vehicles (SUVs) and all the original equipment manufacturers (OEMs) are adding a lot of technology in their products to differentiate them and that is good news for all the suppliers who are focused on technology.”
“Within India, we think that internal combustion engine (ICE) two-wheeler industry or at least scooters have already peaked out in FY19 and a bulk of the growth now will be driven by electric vehicles (EVs) going ahead. So many of these companies have developed products and as those products from the OEMs ramp up next year, the leading suppliers will be key beneficiaries of that addition that will take place,” said Singh.
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