M&M to report separate EV financials from Q4 for greater transparency

M&M share was the top-performing Nifty stock in 2024, rising a massive 84.5 percent.

Mahindra & Mahindra (M&M) is set to introduce a revamped financial reporting framework starting the fourth quarter of this fiscal, aiming to enhance transparency around its electric vehicle (EV) operations. The auto giant plans to restructure its reporting to clearly distinguish EV manufacturing costs and margins across various segments, to demarcate into the performance of its evolving electric mobility business.

At the company’s Q3 FY25 earnings conference, Executive Director Rajesh Jejurikar outlined the changes, stating that M&M’s automotive financials will now be categorized into distinct segments. The standalone automotive results will present both overall figures and a breakdown of contract manufacturing arrangements for EVs, making it easier to track the financial impact of its electric vehicle ventures.

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The development gains even more significance as M&M continues its expansion in the EV market, as it prepares to open bookings for Electric Origin SUVs from February 14. While EV revenues were not a significant part of its Q3 FY25 results, the new reporting structure will take full effect in Q4 FY25, once electric vehicle sales start contributing meaningfully. Initially, the company expects to sell around 5,000 electric SUVs per month across two models, reflecting its growing commitment to the EV space.

Under the new framework, M&M Limited will handle the manufacturing of electric SUVs, which will then be distributed by Mahindra Electric. This means the auto standalone segment will only reflect conversion cost margins, rather than overall product margins, providing a clearer picture of actual manufacturing expenses.

Jejurikar explained that this change would allow M&M to separate conversion costs from other business operations, ensuring better visibility into the financials of its EV division. The company will also report end-to-end margins for electric vehicles, combining two key components: the margin on conversion costs within M&M’s auto standalone operations and the returns from product development investments made by the company.

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During the quarter, the Thar major reported a 19 percent rise in net profit at Rs 2,964 crore for the quarter ended December 31, 2024, driven by strong demand for its sport utility vehicles and tractors. It reported a net profit of Rs 2,490 crore in the year-ago period. The auto major reported a 20 percent rise in revenue from operations at Rs 30,538 crore in Q3FY25 as against Rs 25,383 crore in Q3FY24.

Rising farm incomes have helped boost tractor demand, while surging demand for its 'XUV 3x0' model and a five-door version of its popular 'Thar' SUVs have helped Mahindra sail through an otherwise turbulent year for Indian carmakers.

M&M shares closed at Rs 3,198, higher by nearly 2 percent from the last close on the NSE. M&M share was the top-performing Nifty stock in 2024, rising a massive 84.5 percent.