P R O F I T

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L O S S
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Mahindra and Mahindra

Ratio analysis

Group 11 – Sudheendra S(22734), Sushmitha M(22735), Trisha L(22736), Tushar Nag R N(22737),
Uday R H(22738), Vibha B U(22739), Yashwanth A C(22740)
Introduction
o The Mahindra Group is one of the largest and most admired multinational federations of Companies
o Mahindra group was established in the year 1945
o Enjoys a leadership position in farm equipment utility vehicles information technology and financial
services in India
o It has a 40% domestic tractor market share
o There is a 97% increase in Profit After Tax(after EI) compared to the financial year 2021
o There are leading manufacturers of tractors in India. It has 354698 sales units for tractor
o The firm has 20 manufacturing plants across the country
 FINANCIAL AND OPERATIONAL
HIGHLIGHTS
Particulars 2022 Rs in Cr 2021 Rs in Cr

Revenue from Operations 57,446 44,630

Other Income 2,076 1,199

Profit before Depreciation, Finance Costs, Exceptional items, and Taxation 9,118 8,157

Less: Depreciation 2,451 2,370

Profit before Finance Costs, Exceptional items, and Taxation 6,667 5,787

Add: Exceptional items (209) (3087)

Profit before Taxation 6,235 2,304

Less: Tax Expense 1,300 1,320

Less: Finance Costs 223 396

Profit for the year 4,935 984

Balance of profit for earlier years 29,464 29,102

Profits available for appropriation 34,399 30,106

Add: Due to Scheme of Arrangement --------- (294)

Add: Other Comprehensive Income/(Loss)* 102 (56)

Less: Dividend paid on Equity Shares 1,088 292

Less: Transfer to Retained Earnings --------- (20)

Balance carried forward 33,413 29,464

 P R O F I T
I Profitability
L O S S Ratio
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 Profit Margin

Profitability
Net Profit / Sales
(%) 2022  2021 2020 2019 2018  
  Net Profit (Adj. Net Profit) 5,100.03 2,742.552,190.52 4,817.77 4,045.45  
53,614.0
  Sales Revenue (Net Sales)
57,445.97 44,629.87 45,487.78 0 48,685.55  
   

Ratio
8.88% 6.15% 4.82% 8.99% 8.31%   7.43%
Asset’s turnover Sales / Average Assets  
53,614.0
  Sales Revenue (Net Sales)
57,445.97 44,629.87 45,487.78 0 48,685.55  
38,402.4 30,951.
  Total Assets
47,501.91 44,642.57 39,115.95 2 34,602.62 36
Average Assets = (Cur. Yr + Prv.
 
Yr)/2 46072.24 41879.26 38759.185 36502.52 32776.99  
1.2468673 1.0656795 1.1736000 1.468775 1.4853575 1.2880
   
11 27 12 306 63   559
Return on
Profit / Average Assets
assets (ROA)  
  Net Profit (Adj. Net Profit) 5,100.03 2,742.55 2,190.52 4,817.77 4,045.45  
Average Assets = (Cur. Yr + Prv.
 
Yr)/2 46072.24 41879.26 38759.185 36502.52 32776.99  
    11.07% 6.55% 5.65% 13.20% 12.34%   9.76%
Return on
P R O F I T equity (ROE)
Net profit / Average Equity
 
  Net Profit (Adj. Net Profit) 5,100.03 2,742.552,190.52 4,817.77 4,045.45  
I   Total Equity (Shareholders Funds)
38,960.95 34,951.00 34,467.84
34,209.2
3 30,294.04
26,785.
62
Average Equity = (Cur. Yr + Prv. 32251.63
L O S S  
Yr)/2 36955.975 34709.42 34338.535 5 28539.83  

    11.44
K    
13.80% 7.90% 6.38% 14.94% 14.17%   %
 
Earnings per Earnings available to equity
share shares / No. of shares 41.24 8.24 11.15 40.25 36.61   27.498
Profitability
Profit margin
• Profit margin is 7.43%
 With a very low profit margin, company cannot afford for expansion
 Increasing inventory turnover and eliminating low margin clients can really go for way
 ideal profit margin could be 60% around
Asset’s turnover
 assets turnover is 1.288055
 ideal assets turnover that's between 0.25 and 0.5
 the company has used its asset more efficiently in generating revenue
Return on asset’s
• return on assets is 9.76%
• ideal return on asset could be of over 5% and over 20% could be excellent
• the company generates $9.76 for every $1 in sales
Return on equity
• return on equity is 11.44%
• ideal return on equity is between 15 to 20%
• reduction in the value of shareholders equity Could boost return on equity
earning per share
• earning per share is 27.498
• it indicates the health of the company and gives lower return to the shareholder
 P R O F I T
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L O S S Liquidity Ratio
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Current Ratio
P R O F I T
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2022 2021 2020 2019 2018 Average L O S S
Current
ratio 1.004914 1.054951 1.298047 1.104432 0.998086 1.092086
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01 The current ratio is 1.0920, while the average is 1.09

With the average of 1.0920 of the current ratio the company can meet its short-
02 term obligation and the company does not have any problems meeting its short-
term obligation
Quick ratio
P R O F I T
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2022 2021 2020 2019 2018 Average L O S S
Quick ratio 2.14998 2.71313 1.959696 2.73584 3.063301 2.524389
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01 The Quick ratio is 2.524

02 Generally quick ratios between 1.2 and 2 are considered healthy.

The company isn't investing enough in revenue-generation activities, so it needs to

03 spend some of its assets on new revenue activities merchandising strategy, or in-
adeq-uate marketing.
Receivable turnover
P R O F I T
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2022 2021 2020 2019 2018 Average L O S S
Receivable’
s turnover 21.93461 17.15939 13.0989 15.06164 25.02528 18.45596
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01 The receivables turnover is 18.46

02 High ratio is desirable, as it indicates that the company’s collection of accounts

receivable is frequent and efficient

It also indicates that the company enjoys a high-quality customer base that is able
03 to pay its debts quickly.
Inventory turnover
P R O F I T
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2022 2021 2020 2019 2018 Average L O S S
Inventory
turnover 10.77197 10.90678 12.56537 16.39331 28.46476 15.82044
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01 The inventory ratio is 15.820

02 Inventory ratio is decreasing compared to the previous years

A low inventory ration might be a sign of weak sales or excessive inventory, which
03 is also known as overstocking.
 P R O F I T
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Solvency Ratio
L O S S A solvency ratio is a key metric used to
K measure an enterprise’s ability to meet its
long-term debt obligations and is used
often by prospective business lenders.
Debt Equity Ratio
P R O F I T
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  2022 2021 2020 2019 2018  Average L O S S
Debt
equity
ratio
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0.172828 0.222778 0.087818 0.075165 0.097646 0.131247

01 Higher the debt equity means the company is borrowing more capital for the mar-
ket to fund its operations..
Debt equity ratio
25.00%

20.00%
02 The safe ratio for Debt equity ratio is 2 – 2.5 .
15.00%

10.00%

5.00% While debt to equity ratio for M and M is not even close to 0.5, it has a lot of ca-
03 pacity to borrow debts.
0.00%
2022 2021 2020 2019 2018
Interest coverage P R O F I T

Ratio
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L O S S
  2022 2021 2020 2019 2018 Average
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Interest
coverage
ratio 39.953 12.79221 48.14881 73.18811 68.57389 48.5312

01 It is the ability to repay the interest on the borrowed debts.

02 For auto industry the ideal Interest coverage ratio is 3 or more.

When we take M and M into consideration, the interest coverage ratio is very
03 high, with a staggering figures of 39.953, with a 5 year average of 48.53

This implies that the company has far more capacity to pay interest, if they go for
04 more debts.
Liability Equity Ratio
P R O F I T
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  2022 2021 2020 2019 2018   L O S S
Liabilities
/Equity 0.219218 0.27729 0.134854 0.122575 0.142225 0.179232
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The liability to equity ratio for M and M is 0.21:1 which says that the companies li-
01 abilities are 22% of the total equity.
Liabilities/Equity
0.3
0.25
0.2 02 This ratio has significantly increased due to the impact of covid.

0.15
0.1
It is important to find this ratio to make any further decision regarding borrowing
0.05
03 loans.
0
2022 2021 2020 2019 2018
 P R O F I T
I Capital Market
L O S S analysis
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Price earning ratio(P/E) P R O F I T

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  2021 2020 2019 2018 2017  Average
L O S S
P/E
81.45024 74.01076 15.21242 14.90904 26.55653 42.4278 K

A higher P/E ratio shows that

investors are willing to pay a
higher share price today
because of growth
expectations in the future.
Dividend yield P R O F I T

  2021 2020 2019 2018 2017  Average L O S S

Dividend
yield 0.013037 0.002848 0.013882 0.013741 0.007975 0.010297 K

A good dividend yield varies

depending on market
conditions, but a yield
between 2% and 6% is
considered ideal
Price to book ratio(p/b) P R O F I T

  2021 2020 2019 2018 2017  Average

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Price to L O S S
book
ratio(p/b) 2.294295 2.856322 2.132781 2.144002 3.612357 2.607951
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A price-to-book ratio greater

than 1 indicates that the
stock price is trading at a
premium to the company's
book value. It also indicates
that you could be overpaying
for what would be left if the
company went immediately
bankrupt.
Beta P R O F I T

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  2021 2020 2019 2018 2017  Average
L O S S
Beta 0.9485 1.1713 1.4279 1.0272 1.1453 1.14404
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The market is described

as having a beta of 1.
Here the company is
having beta value of
1.14 , which shows that it
is 14% more volatile than
market.
Returns P R O F I T
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  2021 2020 2019 2018 2017  Average L O S S
Returns -0.1761 0.351576 0.137371 -0.3211 -0.17506 -0.03666 K

Returns is negative, it shows

that company does not
generate enough revenues to
cover all of its expenses
 Findings
BUY
 Company has been maintaining a healthy dividend pay-out of 1%, they should
increase dividend yield so that they can get stable in the market.
 The Stock is trading at 3.36 times its book value.
 The company has delivered a poor sales growth of 1.48% over the past five years.
 Promoter holding is low: 19.4%.
 Company has had a low return on equity of 5.97% for the last 3 years.

SELL  The company’s net sales grew from 48,685.55 Cr to 57,445.97 Cr from the year
2018 to 2022.
 As of September 2022, Mahindra & Mahindra has a market cap of $19.46 Billion. 
 The debt to equity was 0.09 in 2018 and was increased to 0.17 in 2022.
 The total inventory of the company is increasing which means that the company
stock may be piling up.
 Finally the company is not performing well but it has a strong number to stay in the
market.
Managerial Implication
• The statement Mahindra & Mahindra depicts those liabilities are
stable.
• Due to the economic crisis, business operations were halted, and it
had little impact on revenue.
• The company has been steadily investing in assets of all kinds and
hence we can notice a negative cash flow.
• The new Mahindra Scorpio is expected to be the next launch from
the company. The XUV700 is currently overbooked, and this
Mahindra Scorpio boosting up its revenue.
• Mahindra & Mahindra follows a competitive pricing strategy as its
price range is very similar to its competitors.
• In the Financial Year 2021-22, your Company sold 455,570 vehicles
(a growth of 30.7% over the previous year.
 P R O F I T
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THANK YOU
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