Motilal Oswal Wealth Creation Study: What helped this bruised bluechip heal? – CNBC TV18
| Company | Value | Change | %Change |
|---|
M&M’s case study
One such remarkable turnaround is the case of Mahindra & Mahindra (M&M), a leading automobile and farm equipment manufacturing company. From FY15 to FY20, M&M faced significant operational challenges, including inefficiencies in capital allocation, weak product offerings, and heightened competition. During this period, the company’s market share in the automotive segment plunged from 37% in FY15 to 19% in FY20, while its stock price fell over 52%, reflecting the severity of its struggles.
How M&M healed
However, according to the brokerage’s study, between FY20 and FY24, M&M successfully executed a strategic turnaround. The company focused on optimising capital efficiency, divesting loss-making subsidiaries, and revamping its product portfolio. New model launches, such as the Thar (2020), XUV700 (2021), and refreshed Scorpio, helped M&M regain market share, with its SUV segment share increasing from 15% in FY21 to 18% in FY24.
Financially, the company witnessed a substantial recovery, with revenue growing at a 22% CAGR, driven by an 11% volume CAGR in tractors and a 6% volume CAGR in the automotive segment. EBITDA also grew at a 20% CAGR, despite the rise in commodity prices, while PAT grew at an impressive 31% CAGR. The company’s return on equity (ROE) and return on capital employed (ROCE) expanded significantly from 10% and 9% in FY20 to 22% and 20% by FY24, respectively.
The company’s stock price saw a remarkable 3x upside from FY21 to FY24, signalling its successful turnaround and reinforcing M&M’s position as a dominant player in both the automotive and farm equipment sectors.
Also Read : Bruised Blue Chips| Motilal Oswal’s approach to building your portfolio in 2025
First Published: Dec 10, 2024 7:57 PM IST
