PL First Cut - Mahindra & Mahindra

Mahindra & Mahindra | MM IN | TP: INR 1,685 | BUY]

First Cut 1QFY24 results – beat on revenue and margins

Revenue grew by c23% YoY, helped by volume growth of c11% and came ahead of our and Bloomberg consensus estimates (BBGe). EBITDA margins at 13.4% were higher than our (12.7%) and BBGe (13.2%). Gross margin was slightly higher QoQ 30bps, despite higher share from farm division, but largely in line with expectation. Strong control on other operating expenses aided the EBITDA beat. Higher other income (which included dividends from subsidiaries) and lower interest expenses led to the significant PAT beat.

MM has undertaken a restructuring in its reporting and numbers are not comparable with earlier periods.

PL View:

Overall, standalone numbers are beat on our and street estimates and EBIT margins for both Auto and Farm division have expanded, however, due to change in reporting structure numbers are not comparable. We will try to get more clarity on the restructuring at the investor meet today.

Financial performance vs PLe:

Revenue grew YoY by 22.7% to Rs. 241bn, and QoQ by 6.6%, and grew vs PLe at 2.6%

EBITDA grew YoY by 38.2% to Rs. 32bn, and QoQ by 15.6%, and grew vs PLe at 8.7%

APAT grew YoY by 67.3% to Rs. 25bn, and QoQ by 19.4%, and grew vs PLe at 38.8%

EBITDA margin expanded YoY by 151 bps to 13.4%, and QoQ by 105 bps, and expanded vs PLe at 75bps

Revenue per unit grew YoY by 10.8%, was flattish QoQ by -1%, and grew vs PLe at 2.6%

EBITDA per unit grew YoY by 24.8%, and QoQ by 7.4%, and grew vs PLe at 8.7%