Mahindra and Mahindra Rating: Buy | Mahindra unveils five new e-SUVs

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BORN ELECTRIC VISION: Mahindra had recently unveiled its Born Electric Vision, under which it will launch five electric SUVs based on the state-of-the-art INGLO platform (using Volkswagen MEB platform components). The company will be launching its products under two brand names – XUV and BE – so that it can target a wider customer base. The company envisions 25% EV penetration for its SUVs by 2027.

XUV 400: The company also unveiled its first electric SUV, the XUV400 (link ) recently. It is a C-segment SUV of 4.2m length, and comes equipped with a 39.4 kWh battery pack and torque of 310NM. The company also revealed that the EV has a range of ~456km and has the fastest acceleration in the non-luxury segment at 0-100kmph in 8.3 seconds. It will be MM’s first SUV to feature the new bronze-coloured ‘Twin Peaks’ logo in the center. Test drives for the XUV400 will start in Dec-22, with price announcement and bookings/sales starting in Jan-23.

Localisation is high, with only the cells and motor to be imported. The battery was designed by AVL and is being manufactured in MM’s Chakan plant, eBluzent has done the integration of the control units, and Valeo has provided the motor and motor controller units. ABS and suspension technologies used in the vehicle are provided by Bosch, Mando, Tenneco.

Our viewGiven India’s current policy framework, we believe EV penetration has high potential for SUVs in particular. If similar policy support continues, we think the company’s vision of 25% EV penetration for SUVs could turn out to be conservative. Leveraging VW’s MEB platform will have its own advantages, but the company will need to crystallise a localisation plan.

We maintain our view that in the current taxation regime, the large SUV segment is the sweet spot to launch EVs due to the wide GST differential between EVs (5%) and ICEs (50%).

We expect the pricing for XUV400 to be attractive to drive penetration of EVs.

ValuationWe expect M&M to be a key beneficiary of the strong model cycle in utility vehicles (UVs). Thus, despite flattish tractor volumes over FY22-24F, based on our assumptions, we expect a ~33% EPS CAGR on a likely strong auto launch cycle. We reaffirm our Buy rating and TP of `1,505. We maintain MM as our top pick among OEMs.