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Mahindra & Mahindra shares speed up as auto firm wins SUV revenue market share race

Mahindra & Mahindra shares speed up as auto firm wins SUV revenue market share race

Mahindra & Mahindra shares speed up as auto firm wins SUV revenue market share race
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By Dipikka Ghosh  May 30, 2022 6:51:07 PM IST (Updated)

Shares of Mahindra & Mahindra (M&M) Limited on Monday gained as much as 3.65 percent to Rs 988, touching a new 52-week high, on the back of the company’s profit and revenue numbers exceeding Street expectations. The company also gained the top spot in revenue market share of the sports utility vehicle (SUV) segment. 

Shares of Mahindra & Mahindra (M&M) Limited gained over 5 percent on Monday, touching a new 52-week high of Rs 1,006.7, on the back of the company’s profit and revenue numbers exceeding Street expectations.

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The company also gained the top spot in revenue market share in the sports utility vehicle (SUV) segment.
The stock opened with a gain of 2.39 percent on the BSE. At 11:34 am, it is currently quoting at Rs 997.40, up almost 4.64 percent or Rs 44.20. The scrip has been gaining for the last three sessions in a row and has gained over 16 percent year-to-date (YTD).
The company posted a profit of Rs 1,292 crore in the quarter ended March 2022 versus Rs 245 crore in the same period of last year.
Meanwhile, revenue expanded by 28.2 percent on a year-on-year (YoY) basis to Rs 17,124 crore.
However, earnings before interest, tax, depreciation and amortization (EBITDA) saw a dip in the March ended quarter, whereas margin slid by over 300 basis points.
M&M said it achieved the highest ever standalone revenue for auto and farm segments at Rs 55,300 crore for FY22, which is 29 percent higher than previous year's. It also said the company's auto business delivered highest ever quarterly UV (utility vehicle) volumes in Q4 with 42 percent YoY growth.
The company recorded its highest revenue for the auto and farm segment in FY22. M&M also became number 1 in sports utility vehicle (SUV) revenue market share in Q4 and in the second half of FY22, while FES gained 180 basis points market share in FY22.
On leading the SUV revenue market share, Rajesh Jejurikar, Executive Director, M&M, said, “It indeed has been a very gratifying experience to see our SUV revenue market share come back to a number one position. And we are focusing on revenue market share because our products average selling price is way above most of our competitors. We play in a different segment and we need to take that on account when we look at our share.”
He expects strong growth in auto business in FY23 and believes that the worst of supply constraints are behind for the company.
We go in with a lot of optimism into FY23. When I make that statement, we have to moderate that statement with some risks that remain on the external environment, especially getting out of the current China lockdown situation where some supplies have been disrupted, and to see the way the overall global supply chain plays out, especially semiconductors, but if we leave that risk aside, and that's something that we have to navigate month on month, it's not going to be seamless, it's something that needs focus and it has the focus of our management. We would see very strong growth momentum in our auto business going into FY23,” he said in an interview to CNBC-TV18.
Morgan Stanley maintains a bullish view on the stock with a target price of Rs 1,145 after the company's Q4 earnings came in above estimates.
Meanwhile, Harsha Upadhyaya, CIO - Equity, Kotak Mutual Fund, has a different take on the auto sector. He highlighted that demand in the auto sector is still hazy and hence, there's a need to be stock specific.
“We are more positive on four-wheelers as compared to two-wheelers. Yes, the recent correction in metal prices will aid a little bit on the profitability side. But still, there are many other structural issues which need to be resolved for this sector for sector to become a really strong sector," he explained.
"For example, demand is still hazy. I don't think it's that strong and in terms of overall chip shortage, I think that issue has not been resolved yet. So yes, from the expectations of let's say one or two months back in terms of where the profitability was headed, there has been a deprive and clearly the commodity pressure is reduced at this point of time. But nevertheless, I think there are still few negatives so we will be very stock specific in the sector as well," he explained.
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