M&M Becomes India’s Second Most Valuable Auto Company

Mahindra & Mahindra (M&M) reached a significant milestone on June 18, 2024, as its shares touched the Rs 3,000 mark for the first time. This achievement is a testament to the company’s robust performance and investor confidence. Just a few days earlier, on June 14, 2024, M&M surpassed Tata Motors in market capitalisation, reaching Rs 3.64 lakh crore compared to Tata Motors’ Rs 3.62 lakh crore. This leap positioned M&M as the second most valuable automobile company in India, trailing only behind Maruti Suzuki.

Aggressive Expansion Plans Fueling Optimism

Several factors are contributing to the positive sentiment surrounding Mahindra’s stock. M&M’s strategic approach to the Indian passenger vehicle market has been multifaceted, focusing on both internal combustion engine (ICE) vehicles and electric vehicles (EVs). The company aims to capture a larger share of the growing market by launching 23 new vehicles by 2030. This ambitious plan includes nine ICE SUVs, seven battery-electric vehicles (BEVs), and seven light commercial vehicles (LCVs).

Localization and Infrastructure Plans Impress Investors

Investors are further encouraged by Mahindra’s focus on localizing electric vehicle battery production.Mahindra Group plans to invest Rs 37,000 crore over the next three years across its various business verticals, with a significant portion dedicated to the automobile sector. Part of this investment will be directed towards the local manufacturing of EV battery packs, starting in January 2025. This local production is expected to reduce costs and make M&M’s EVs more competitive in the market.

Building EV Charging Infrastructure

To address the issue of range anxiety among consumers, M&M is also focusing on developing a robust EV charging infrastructure in India. Currently, the country has around 27,000 public charging stations, significantly lower than the 176,000 in the US and an even higher number in China. By improving this infrastructure, M&M aims to boost the adoption of electric vehicles.

Partnerships for Technological Advancements

M&M is actively seeking partnerships with global players to enhance its technological capabilities, particularly in EV battery cell production. The company has already signed an agreement with the Volkswagen Group to share key EV components. This partnership will allow M&M to source components and unified cells from Volkswagen’s MEB architecture for its INGLO platform. Additionally, M&M plans to roll out seven new EVs by 2030, including models like the XUV.e8, XUV.e9 coupe, and BE.05.

Product Launches and Capacity Expansion

Mahindra is gearing up for several key product launches, including the Mahindra Thar 5-door and a Scorpio-N-based pickup truck. The company is also preparing for a mid-life overhaul of the XUV 400 and the introduction of the electrified XUV 700, named XUV e8. These new models, along with the planned increase in EV production capacity, are expected to significantly boost M&M’s market presence.

Historical Performance

Founded in 1945, the Mahindra Group has grown into one of the largest and most admired multinational federations of companies. With a leadership position in farm equipment, utility vehicles, IT, and financial services in India, Mahindra is also the world’s largest tractor company by volume.

The company’s stock has shown impressive performance, with year-to-date returns of 75.22% and one-year returns of 112.68%. Over the past decade, M&M’s stock has delivered a 414.92% return, reflecting strong investor confidence.

Conclusion

Mahindra’s recent surge in stock price and rise to the number two position in the Indian auto market by market capitalization is a clear sign of investor optimism. The company’s aggressive expansion plans, focus on electric vehicles, and commitment to building a robust EV ecosystem are key factors driving this positive sentiment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.