Analyst Concall
M&M pins hopes of auto ops growth on commodity cost trend
This story was originally published at 22:24 IST on 30 July 2026
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--M&M: Expect business to pick up hereon if inflation remains contained
--CONTEXT: Comments by M&M mgmt in post-earnings analyst call
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--M&M: Have scope to improve operating profit margin Q2 vs Q1
--M&M: Hope commodity prices soften somewhat in Q3
--M&M: See tractor higher Q3 on softer commodity price, festive demand
--M&M: Will go all out to transition to EVs as much as possible
--M&M: Would like to achieve high mkt share in EV space by 2030, 2031
By Anand JC and Priyasmita Dutta
MUMBAI/NEW DELHI – Mahindra & Mahindra Ltd. expects growth in its automotive division to pick up if commodity costs, which have seen a marked increase since March, don't rise significantly again, the company's management told analysts in a post-earnings call Thursday. "As a framework, right now we are expecting that Q1 in auto was a low point, and it should improve from here," Amarjyoti Barua, chief financial officer of the Mahindra group, said.
Echoing the view, the group's Chief Executive Officer and Managing Director Anish Shah said the automotive business should be able to maintain or slightly improve the operating profit margin in the September quarter from the June quarter if there is no further "dramatic" change in prices of commodities from here.
The margin of M&M's automotive division saw an impact of 450 basis points because of commodity inflation in the June quarter. The company raised prices to offset some of this pressure.
"We have consciously taken what we may call a slightly aggressive price increase; we normally are more conservative," Shah said. Given that customers do not prefer multiple price increases, because it delays the process of converting an enquiry into a purchase, the company increased prices of its cars by an average of 2.7% across the portfolio.
"The new prices are just getting in. But so far, we are not seeing any significant impact that it is having on demand," Shah said. The company could not deploy the same strategy in its farm division because of structural and seasonal reasons.
In M&M's farm division, the company could not hedge the inflation seen in steel and rubber. The price hikes taken in its farm products have also been insufficient as commodity costs have increased further. The division also saw an impact on its operating leverage. "Overall, I think as we get into Q3, we are hoping that there will be some softening on commodities. Plus, we also get into the season up-cycle, which will help tractors, certainly," Shah said.
For the June quarter, M&M reported a net profit of INR 36.85 billion on revenues of INR 419.59 billion. Both metrics were higher than consensus estimates and the company ended Thursday's session as the top gainer on the benchmark Nifty 50 index.
AUTO FOCUS
Despatches of M&M's sport utility vehicles grew 15% in the June quarter despite production issues in April and May. The company saw strong demand for its cars in both rural and urban areas.
Highlighting shifts in powertrain preferences, the company said it is seeing a rapid segmental shift to cars running on compressed natural gas, especially those in the lower goods and services tax category, in the past few months. "But also, there are people who have looked at diesel because fuel efficiency has become that much more salient in a way. So you are kind of seeing some of this play out in the fuel mix," Rajesh Jejurikar, executive director and chief executive officer of M&M's auto and farm division, said.
On the upper end of the spectrum, M&M has seen higher demand for its electric vehicles as well. Shah stressed that the company's focus on electric cars is not purely because of the upcoming, stricter emission norms. "It is a better product overall for the customer; we can do that profitably as well," he said.
Asked if M&M would prefer profitability over market share gains in the electric cars business, Shah said the company would want both. "We want higher market share in EVs, we want a higher market share in ICE (internal combustion engines), and we want more profitability as well," he said. In the short run, the company is banking on the government's production-linked incentives to bridge the profitability gap between electric and conventional cars.
Thursday, shares of Mahindra & Mahindra closed at INR 3,283.70 on the National Stock Exchange, up 1.9% from Wednesday. End
Edited by Rajeev Pai
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