MOSL: MAHINDRA & MAHINDRA (Buy)-Annual Report- Focus shifts to growth post capital allocation changes
MAHINDRA & MAHINDRA (Annual Report): Focus shifts to growth post capital allocation changes; Focus on building stronger brands in Auto; FES banks on farm machinery
(MM IN, Mkt Cap USD12.9b, CMP INR779, TP INR900, 16% Upside, Buy)
Mahindra & Mahindra (MM)’s FY21 Annual Report highlights that the company has reoriented its focus on growth after tightening its capital allocation policies. Besides listing out the priority areas for the Auto and Farm Equipment Sector (FES) businesses, it explains future growth areas for farm mechanization and shared mobility/logistics. Key insights from the Annual Report are highlighted below.
- Focus shifts to generating growth after recalibrating capital allocation: Post the successful execution of the ‘Reboot’ strategy, targeting the tightening of capital allocation, MM has shifted its focus to accelerating growth with clearly laid out strategies for the Auto, Farm, Financial Services, and IT Services businesses.
- Auto business focus on building stronger brands: Its long-term strategy for the Automotive business is to build a strong, sophisticated, and authentic SUV brand, with a strong road presence and advanced, adventure-ready capabilities. It plans to launch 9 SUVs and 14 LCVs by CY26.
- EV strategy: MM’s short-term focus is on last-mile mobility, which it expects would reach an inflection point. It intends to commence its EV journey with a new portfolio of ICE-derived SUVs, transitioning to a Born EV platform. MM has set up a fresh investment of INR30b for the Born EV platform and is simplifying the structure (by merging Mahindra Electric) to provide resources and direction to realize targeted growth.
Mahindra & Mahindra is a holding company. Through its subsidiaries, Co. is engaged in manufacturing, distributing and selling of tractors and multi utility vehicles, light commercial vehicles and three wheelers. In addition, Co. is also engaged in provision of information technology and telecommunications services and other services related to financing, leasing, hire purchase of automobiles and tractors. Co. has four significant segments: Automotive, Farm Equipment, IT Services and Financial services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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