Mahindra pegs Rs 34,000 crore capex by FY27, lines up 23 models by 2030

MUMBAI: The Mahindra & Mahindra Group, which on Thursday reported a 32 percent jump in standalone net profit at Rs 2,038 crore for the March quarter, has earmarked Rs 34,000 crore of capital investment by FY27, most of which will go into the automotive business to develop new models in the traditional fossil fuel-driven vehicles and into electric mobility space.

As much as Rs 27,000 crore of the planned Rs 34,000 crore capex and investment will go into the mobility segment, with the company lining up as many as 23 models by the turn of 2030, managing director & chief executive Anish Shah told reporters at the group headquarters here.

Giving a break-up, he said Rs 8,500 crore will go into the group’s bread and butter SUV segment powered by traditional fuels where it is lining up nine new models by the end of the decade, and Rs 4,000 crore will go into the electric mobility segment where it is lining up nine new EVs. The company is also lining up seven models in the LCV space of which two will be EVs, he added.

“We will deploy Rs 37,000 crore during FY25-27, the major chunk of which will be spent on the automotive category. We will not ignore ICEV and a major chunk of our capex will be spent on that segment in the automotive segment,” Shah said.

Joining him, Rajesh Jejurikar, the chief executive of the auto & farm equipment verticals, said another Rs 12,000 crore will be pumped into the mobility arm Mahindra Electric Automotive (MEAL). Of this, already Rs 900 crore has been invested by the group and another Rs 1,200 crore will come in from external partner British International Investment (BII) and Rs 300 from Temasek.

BII has agreed to extend the timeframe for the final tranche of its planned investment of Rs 725 crore. So far, BII has invested Rs 1,200 crore and Temasek has invested Rs 300 crore in MEAL. Temasek will be investing the balance Rs 900 crore as per the agreed timelines, Jejurikar said.

An additional Rs 1,500 crore is earmarked for normal capacity addition during these two years, taking the overall automotive investment play to Rs 26,000 crore into developing new models, and another Rs 1000 crore into other automotive subsidiaries, taking the total to Rs 27,000 crore, Jejurikar said.

On the other Rs 7,000 crore capex, Shah said the farm division will get Rs 5,000 crore of which Rs 2,800 crore go into new product development and Rs 700 crore for capacity augmentation and the remaining Rs 1,500 crore will go into other corporate purposes. The rest of the capex will go into Mahindra Finance, which is the group’s captive non-bank lender which largely funds auto buyers.

Asked why the EV capex is only half of the ICE (internal combustion engine) spends, even as the market is moving to EVs at a much faster clip, Jejurikar told The New Indian Express that in the ICE space, investment is from bottom down as new model development is capital intensive and heavy but on the contrary, in the EV space once topdown investment is made, then the ride is smoother.

“After all, even today we see at least 70 percent of our business coming in from our ICE business till about 2030. Moreover, the EV penetration is just about 1.5 percent of the total market of 2.3 million annual units. It can be noted that the passenger vehicles space clipped at 12.5 percent to 2.38 million units compared to 2.12 million in the year before.”

Manoj Bhat, the group chief financial officer, said automotive revenue rose 20 percent, while that from farm equipment fell 13.1 percent due to a 21.5 percent fall in tractor and farm equipment sales as sub-par rains affected rural demand.

The management of the country’s largest tractor-maker by volume with over 41 percent market share said while they see 5 percent volume recovery this fiscal, they will grow above the market.

Similarly, for the automotive segment also, they guided towards a mid-teen to high teen volume pick-up this fiscal.

The standalone revenue rose 11 percent to Rs 25,109 crore in the reporting quarter as against Rs 22,571 crore a year ago but the margin remained flat at 12.4 percent.

During the quarter, automobile volume grew 14 percent to 2,15,280 units, while farm equipment sales fell 21.5 percent to 71,039 units.

Mahindra sold 27.2 percent more SUVs in the quarter from a year earlier. The automotive business brings in almost two-thirds of total revenue and includes the sale of commercial vehicles and SUVs such as Scorpio and Thar.

Jejurikar stated the company continues to be the No1 SUV player by revenue and gained 3.5 percent market share in LCVs 3.5-ton category while the tractor market share rose 40 bps to 41.6 percent.

Meanwhile, the automaker declared dividend of Rs 21.10 per share, the record date for which is July 5, 2024.