Mahindra & Mahindra Ltd is likely to maintain its market position in its core SUV and tractor markets despite the entry of new competitors, ratings company Crisil said.
“Cost-efficient operations, development skills, broad product portfolio, and increased production capacity will enable the company to maintain its leading market position in the tractor, UV, and LCV segments over the medium term,” the agency said.
Mahindra & Mahindra is the biggest player in Indiaś SUV market, despite the presence of major international brands like Ford and Nissan. It has models like XUV 500, Scorpio and Baleno that have established themselves in the Indian vehicle market.
M&M has a market share of more than 25% and has a share of over 40% in the LCV industry. It also has a market share of over 40% in the tractor segment over the past six years and improved its market position in the LCV segment.
“Despite competitive pressures in the UV segment, M&M has a share of more than 50% in UV2 segment,” CRISIL said.
The agency was commenting on the companyś performance after giving a rating of AAA/Stable to its convertible debentures.
It however warned that M&M is likely to face heightened competition in the coming years in the light commercial vehicle and utility vehicle market.
“Healthy growth over the past few years has attracted a lot of players, which are expected to launch products in the UV and LCV segments in the next two to three years,” the agency said.
“With increasing competitive intensity, ability to launch new products and the success of these products are critical to maintain market position.”
With initiatives in joint development of engines and common sourcing, it will be able to leverage synergy benefits with SsangYong Motor Company over the medium term, CRISIL said.
“Improving revenue and geographical diversity will enable the maintenance of a stable business risk profile, despite the impact of cyclicality, competitive intensity, and moderate performance of some investments and business segments. This, along with healthy pricing power should ensure a stable operating profitability margin; exceeding 11% for last 5 fiscals.”
