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Tata Motors sells 100x more EVs than M&M – but both are valued at around $9 billion

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Shreya Christina
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  • Mahindra & Mahindra’s electric vehicle business is still in its infancy, but investors value it on par with Tata Motors‘EV-biz.
  • While pure numbers may not be enough to justify M&M EV biz’s steep valuation, investors may be looking to the company’s future prospects.
  • While Tata Motors has sold nearly 100x more electric cars than Mahindra in the past year, two financial stats get bogged down.
  • We’re trying to decipher why investors value the EV businesses of M&M and Tata Motors the same, despite the huge differences.

Mahindra & Mahindra has raised new funds from British International Investment (BII) and appreciates its EV business at ₹70,000 crore or $9 billion – almost on par with Tata Motors’ EV business.

Tata Motors’ EV business was valued at $9.1 billion after it raised $1 billion from TPG Rise Climate last October.

The M&M deal comes as a surprise to industry viewers, mainly because of an absolute mismatch in data. Tata Motors has beaten M&M in space – literally 100 to one.

According to the latest FADA report, M&M sold a total of 156 electric cars in the passenger car segment in FY22. On the other hand, Tata Motors, which has two models on the market, sold nearly 15,200 electric cars — 100 times more than what M&M sold.

The electric rickshaw

M&M’s EV business isn’t just about cars, though. It also has some electric tricycles in its portfolio, at prices several times lower than electric cars.

This is why analysts are bullish on its EV business, labeling it a “proactive” car company, despite a single electric car in its portfolio – the eVerito. This car is mainly used as a cabin.

“M&M is also proactive on electrification and already has a 3W electric and e-rickshaw and PV (e-Verito) on India’s roads. With a pipeline of exciting launches in electric PV and LCV, the company is steadily transforming amid changes in the technology landscape in the automotive industry,” said a report from ICICI Direct.

It sold just over 8,000 electric tricycles in FY22, according to FADA — this too is comfortably lower than Tata Motors’ sales of EVs. Combined with Mahindra’s strong brand recall in rural areas thanks to its tractor business, this puts the company very well on 3W electrics – a segment where Tata Motors is recording a blank.

M&M and Tata Motors to sell EVs in FY22 India / Flourish

The EV Roadmap

The key to understanding the future of Mahindra’s automotive business is identifying the product roadmap. M&M executive director Rajesh Jejurikar said the company’s SUV lineup will be 20-30% electric by 2027.

Eight new electric vehicles are to be launched by 2027. Four of these will be brand new cars and four will be ‘conversion’ of existing petrol and diesel cars.

IDBI Capital has also impressed with M&M’s three new ‘blockbuster’ launches – the new Thar, XUV 700 and Scorpio-N – stating it has made a comeback. The brokerage also says the company is “unlocking value” from its EV business — and is no longer just a tractor company.

Money will attract more money

Nick O’Donohoe of BII has a different take on valuation. In the press release, he said this investment will “attract additional sources of private capital” into Mahindra Electric. While he didn’t go into details, he said this venture is “exciting”.

Green funds, and their large appetites, could also be one of the reasons for the large investments in M&M.

“Climate change is one of the greatest challenges of our time. The investment in Mahindra’s EV business is in line with our decarbonisation strategy and focus on supporting sustainable business models that create new jobs, especially for women,” said Samir Abhyankar, BII CEO.

He also stressed that this is intended to attract other “like-minded investors” in the future.

Lock, Stock and Debt

There are other advantages that M&M has over Tata Motors that make it an attractive investment. The former has much less debt. The total debt is 75,000 crore – that’s half of what’s on Tata Motors’ books.

M&M is also a profitable business, while Tata Motors has reported losses of more than ₹64,000 crore in four of the past five years. In addition, the former’s stock also outperformed the index. Since early 2022, it has outperformed the Nifty Auto index by four times, rising more than 38%, while the index gained less than 9%.

“Within OEMs, M&M remains our top pick as it has outperformed relatively better within the automotive OEM space after a multi-year breakout that marks a structural turnaround,” said a report from ICICI Direct.

Tata Motors sells 100x more EVs than M&M - but both are valued at around $9 billion
M&M share price in 2022BSE / India / Bloom


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