Mahindra & Mahindra Limited (M&M), a part of the Mahindra Group, is one of the largest automobile manufacturers in the country and the largest tractor manufacturer in the world.
The market capitalisation of M&M Limited, as of March 2018, is more than Rs.91,000 crore.
Company’s Wealth and Recent Performance
Q1 FY 2018-19
The key highlights of the company’s financial performance for Q1 FY 2018-19, ended 30 June 2018 are as follows:
- The company reported an increase in the revenue by 12.8% YoY and stood at Rs.8,276 crore. It jumped 2.8% QoQ.
- The EBITDA registered a growth of 16.4% YoY and stood at Rs.1,357 crore. The EBITDA margins were up 370 bps YoY.
- The consolidated PAT (Profit After Tax) jumped 12.4% YoY and stood at Rs.898 crore. It decreased 26.5% QoQ.
- By the end of the quarter, the company’s cash and cash equivalent stood at Rs.8,413 crore.
- The company’s active client count stood at 926 in Q1. It added 13 active clients over the last quarter.
- The company appointed Manoj Bhat as a Chief Financial Officer (CFO) with effect from 1st June 2018.
The key highlights of the company’s financial performance for the entire FY 2017-18, ended 31 March 2018 are as follows:
- The company recorded a 5.6% YoY increase in the revenue which stood at Rs.30,773 crore.
- The EBITDA (Earnings before interest, taxes, depreciation, and amortization) at Rs.4,710 crore; up 12.6% YoY while the EBITDA margins stood at 15.3%; up 90 bps YoY.
- The PAT recorded an increase of 35.1% YoY and stood at Rs.3,800 crore.
- The free cash flow for FY18 stood at Rs. 2,760 crore (US$ ~429 mn).
- The company’s cash & cash equivalent stood at Rs.7,774 crore (US$ 1,193 mn).
- The company’s active client count stood at 913 as against 843 in FY 17.
- Mahindra & Mahindra board proposed a dividend of Rs.14 per share (280%) on the face value FV of Rs.5.
The key highlights of the company’s financial performance for the Q4 FY 2017-18, ended 31 March 2018 are as follows:
- The company revenue increased 7.5% YoY and stood at Rs.8,054 crore.
- The EBITDA recorded a growth of 57.1% and stood at Rs.1,412 crore while the margins stood at 17.5%.
- The PAT reported an exceptional increase of 107.8% YoY and stood at Rs.1,222 crore.
- In its financial report for the December quarter, the company filed results for M&M and Mahindra Vehicle Manufacturers Limited. Net revenue for the third quarter was reported to be at Rs.11,491 crore - a 10.3% year-on-year increase over the same quarter last year.
- Similarly, EBITDA was up 19.3% over the same period last year to Rs.1,693 crore. A similar increase was witnessed in net profit figure as well. The company’s profit after tax for the September-December quarter was Rs.1,306 crore - a 16.9% increase over the Q3 FY17.
- Considering the growth in volumes over the last quarter, M&M’s overall volumes improved by 6.6% over the corresponding quarter of 2017. The volumes in farm equipment sector (FES) also increased by roughly 6% year-on-year. Tractor exports also grew by 5.8% over Q3 FY17.
- The December quarter also saw the launch of two new variants - All Powerful Scorpio and XUV500 W9. Furthermore, the automobile giant has also scheduled four new launches for the fiscal year 2018-19.
Mahindra & Mahindra Stock Trends in 2018
- On January 1, 2018, the scrip opened at Rs.751 on NSE and BSE. Driven by performance updates, M&M share price touched Rs.770 in mid-January, only to drop down again. The closing price at the end of the month was Rs.763 on NSE.
- February started well for the investors, as the stock price on the first day of the month reached a high of Rs.802.55 on NSE. However, owing to weak global cues and worldwide market turbulence, the price went down signalling a bearish trend. By February 20, 2018, the stock price had reached a low of Rs.703. However, in the last week, the shares showed signs of recovery and the closing price at the end of the month was Rs.728 on NSE and BSE.
- The price of the stock at the beginning of March stood at Rs.728. It increased marginally by around 20 points and ended of the month at Rs.744.
- In the month April, the scrip picked up the pace and increased by around 115 points. The opening price of the stock at the end of month stood at Rs.864.
- The stock price fell for most of the May. However, it gained strength towards the end and reached the Rs.900.
- In the month of June, the price of the stock was stable and did not witness any major fluctuations. By the end of the month, the scrip stood at Rs.909.
- The scrip increased by around 30 points in the month of July. The opening price of the stock by the end of July was at Rs.935.
- In the month of August, the stock price picked up the pace and increased by around 45 points. By the end of the month, the price of the stock stood at Rs.982.
- The scrip did not change much in the month of September. As on 14 September 2018, the price of the stock stood at Rs.941.
Mahindra & Mahindra Stock Trends in 2016 and 2017
- At the start of 2016, M&M shares were trading at around Rs.630 on NSE and BSE. Over the course of January, the price entered the Rs.500 territory, albeit for a short while. It bounced back in February on the back of performance updates and through March, the stock price remained steadily above Rs.600.
- In April, the share price soared to cross Rs.650 on the back of above-normal monsoon prediction and credit rating update. Through the months of May and June, Mahindra & Mahindra Limited stock price remained above Rs.650. By late June, the stock price cross Rs.700 owing to strong sales numbers.
- In July, the company announced the final dividend of 240%. This, in conjunction with regular performance updates, kept the share price steadily above Rs.700 in the months of July and August. The stock price did go through its usual ups and downs but it never went below the aforementioned limit. Things remained roughly the same until late September, when the stocks were changing hands at around Rs.680.
- The stocks staged a comeback in October but that rally did not last for long. Mid-October marked the start of a bearish trend that lasted for the whole year. The price went down gradually and by the end of the month, it was close to Rs.660. Post demonetisation in November, the share price took a nosedive and went down in the range of Rs.610-630. In December, it went below Rs.600 and the closing price at the end of the year was close to Rs.587.
- By the start of 2017, the share price had crossed Rs.600 again. Through the months of February and March, M&M stock price remained above Rs.630 on the back of regular performance updates and sales reports. The stocks made decent gains over the three-month period, starting from Rs.592 on January 2 to Rs.643 on March 31, 2017.
- In the month of April, the stock price managed to get beyond Rs.670 while in May, M&M stocks tried to find a steady bearing at that level. Early June marked a reason to cheer for Mahindra & Mahindra investors as the share price crossed Rs.700 owing to a strong performance in Q4 FY17.
- In July, however, the stock price entered the Rs.600 territory again. The announcement of the final dividend of 260% kept investors confidence high. Things did not vary significantly in August as the stock price tried to cross Rs.700 mark again. Through most of the month, the stocks of the SENSEX listed company were trading at around Rs.670-680. Things changed in September when the price went down dramatically. The closing price at the end of the month was Rs.627.
- M&M shares staged another recovery in October wherein, the price crossed Rs.650 and went on own upward trend. By mid-November, the scrip had crossed Rs.700 on the back of bonus issue plans, performance updates, and positive cues. In early December, the price went below Rs.700, although it was only for a brief period. Driven by the announcement of hike in vehicle prices and bonus issues in 1:1 ratio, M&M stocks crossed Rs.760 by late December. The closing price at the end of the year was Rs.750 on NSE.
Why Invest in Mahindra & Mahindra?
- Mahindra & Mahindra are one of the largest business conglomerates in India, with businesses across over 11 sectors. The company’s main revenue sources remain its automobile and tractor business, which saw a 10% increase in revenues year on year for the quarter ending December 2017.
- Furthermore, M&M has positioned itself well in the agricultural sector given their absolute dominance in the market shares of tractors. Additionally, as the demand for consumer vehicles goes up, especially for large trucks, we can expect an increase in the revenues of the company. M&M has also invested in its subsidiaries and new ventures which can generate monetary returns in the future.
- However, when we consider the company’s long-term fundamental financials, they are not as impressive as its peers such as Maruti Suzuki and Ashok Leyland. Another factor to be considered here is the cyclic nature of this industry. This needs to be factored in while considering long-term potential of M&M stocks. Therefore, from this perspective, investing in M&M stocks may not seem that feasible. Whatever may be the case, it is advisable to perform your own research before investing.
Mahindra and Mahindra, popularly known as M&M are a global entity with interests in the automobile, information technology, financial services, defence and real estate sectors. With such a diverse portfolio of products and services, the company has interests in 11 business sectors and are ever growing. The company originally operated as a steel trading company before entering the manufacturing sector. Its tie-up with Willy Jeep led it to enter the light commercial vehicle industry and later agricultural tractors.
In addition to its automobile business, Mahindra also entered the two-wheeler segment after it took over the Indian arm of Kinetic Motors. A series of acquisitions saw the company make forays into sectors as diverse as information technology (Tech Mahindra), racing (Mahindra Racing), energy and defence.
History of the Company
Mahindra and Mahindra was set up in the year 1945 by three partners. Known as Mahindra and Mohammed, the name was changed in 1948 following the departure of Malik Ghulam Mohammed. The company set up operations in steel trading in Ludhiana before expanding to manufacturing after it secured a contract to produce the Jeep in India.
Progressing to light commercial vehicles and tractors, the company soon expanded into two-wheelers after acquiring Kinetic Motors. With an eye on the future, the company also has a controlling stake in the REVA Electric Car Company.
Mahindra Tractors, the farm equipment subsidiary soon became the world’s leading tractor manufacturer, with a presence across America, Africa, Asia and Australia.
The company’s long association with motorsport has also given it wide exposure, with the company allocating significant resources towards the development and sponsorship of sport and adventure sport in particular. The continued development and manufacture of the company’s flagship SUV’s and MUV’s saw the opening of a manufacturing plant in Detroit, USA in November 2017.
Mr. Anand Mahindra- Executive Chairman
The Chairman of the Mahindra & Mahindra, Mr. Mahindra has served in this capacity since 2016. Prior to this, he served as the Chairman and Managing Director of Mahindra & Mahindra as well as the Mahindra Group flagship company from 2012 to 2016. Mr. Mahindra began his career at Mahindra Ugine Steel Company in 1981 and rose steadily, being appointed Deputy Managing Director of the flagship company in 1991.
An avid sportsman, Mr, Mahindra has actively promoted and encouraged participation and sponsored a number of sports, establishing the Pro Kabaddi League to promote interest in the sport.
In addition to his responsibilities at the Mahindra companies, he serves on the board of the U.S. – India CEO Forum, World Bank Group’s Advisory Board for Doing Business, and the National History Museum in London among others.
An alumnus of Cornell University and Harvard Business School, he completed his schooling at the Lawrence School, Lovedale.
Dr. Pawan Kumar Goenka- Managing Director
Mr. Goenka has served as the Managing Director at Mahindra & Mahindra since November 2016. Prior to this, he served in a number of capacities across Mahindra subsidiaries. He was formerly associated with General Motors, where he worked in their R&D facility. A B. Tech in Mechanical Engineering from IIT, Kanpur, he received his doctorate from Cornell University and also studied management at Harvard Business School.
Mr. Goenka is currently the Chairman of the Board of Directors at IIT, Madras and has been the recipient of a number of accolades such as the FISITA Medal of Honour (2016) for his contribution to the automobile industry.
Mahindra & Mahindra Listing in NSE, BSE and Indices
Mahindra & Mahindra shares can be traded on the Bombay Stock Exchange, the National Stock Exchange and other major indices. For the purpose of trading in Mahindra shares, the following codes can be used:
Sector: Auto- Cars & Jeeps
In addition to the above indices, M&M shares are traded on other bourses, a few of which have been listed below:
- CNX FMCG
- S&P CNX 500
The company’s registered office is as given below:
Mahindra & Mahindra Limited,
Mumbai- 400 001
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