India Ratings affirms M&Ms LT rating; maintains stable outlook

22 Sep 2022 , 11:57 AM

India Ratings said that M&M has maintained its leadership position in the domestic tractor market with around 42.7% market share in terms of volumes during 1QFY23. It is also among the top two players in the light commercial vehicle ((LCV) goods carriers) segment with around 41.9% market share in 1QFY23. With new launches in the electric three-wheeler (e-3W) segment, the company held a dominant market share of 73.4% in the organised e-3W industry in FY22. M&M has a diversified business profile with presence across segments including farm equipment, auto, defence, information technology, financial services, mobility services, hospitality, steel trading, automotive components and infrastructure. However, farm equipment and auto businesses together are the key revenue and profitability drivers. The diversified revenue stream shields the companys consolidated credit profile to an extent against demand variations in the individual business divisions. With the intent of creating value for stakeholders, the company has tightened its capital allocation policy and continues to evaluate all its investments on criteria such as strategic benefit and financial returns (investments with a clear path to return on equity of 18%). M&Ms standalone and consolidated (excluding MMFSL) credit profile is characterised by low financial leverage and high coverage ratios. India Ratings expects M&Ms credit metrics in FY23-FY24 to remain largely in line with FY22 levels due to the overall recovery in the domestic auto sector. The consolidated revenue (excluding MMFSL) increased to INR789 billion in FY22 (FY21: INR623 billion). The rating agency believes the companys revenue will increase 10%-12% yoy in FY23, supported by a recovery in the auto industry as well new launches by the company. EBITDA margins declined slightly to 11.1% in FY22 (FY21: 12.4%). The agency expects margins to remain at around 11%-12% in FY23. M&M Group enjoys a leadership position in farm equipment, utility vehicles, information technology and financial services in India. It is the worlds largest tractor company by volume. It has a strong presence in renewable energy, agriculture, logistics, hospitality and real estate. The company reported 66.9% rise in standalone net profit to Rs 1,430 crore on a 66.7% jump in revenue to Rs 19,613 crore in Q1 FY23 over Q1 FY22. Shares of Mahindra & Mahindra were down 0.46% to Rs 1300 on the BSE. Powered by Capital Market – Live News