Record setting numbers by Mahindra and Mahindra. The only problem is that the street anticipates them to do well every quarter and therefore the expectations are set so high that it must be becoming difficult for Dr. Anishin team to beat them. Uh Dr. Sha, is that a good problem to have or a bad problem to have? Well,
At 66% operating profit growth and 47% reported profit growth. In some ways I can say it's a good thing that people continue to expect us to do well and it's probably a better thing that we stay slightly ahead of their expectations as well.
Yeah, but you're creating benchmarks, right? I mean, every number is a milestone, I'm sure, but a 50,000 crore number or whatever the X numbers that you're setting up. How do you see the trajectory ahead as the base goes up but presumably the opportunity size goes up with all the FTAs that India is signing, maybe export opportunities going up, but maybe the enhanced competition as well coming up, though I know you've said that it's always competitive.
As you're a market leader, you always have more opportunities. First of all, the profit pie grows as you become a bigger market leader. And what we are seeing is large businesses are capitalizing on that leadership. Our smaller businesses are starting to grow much faster and get towards that market leadership. So it's about pure execution. Our teams focus on what we call our input metrics. If we do our input metrics well, we will get the right output metrics and collectively we will get the right results. So our focus is to keep our head down, deliver what we have to deliver, the results will follow.
Okay, okay, I'm going to use some numbers here to just get some answers from you. So, one thing that people really want to know is the update on the booking number for the XUV700, because I think you've received some 90-95,000 bookings and multiple other facets as well. How do you think of the deliveries for all of these and what happens with the increasing number of EVs in your portfolio? Whether they result in some bit of margin dilution considering that input costs as well are moving higher.
So we are adding some capacity to EVs as well. The bookings continue to be very strong at dealerships on a daily basis. So that trajectory is a good one and there is a wait right now because the demand again has exceeded our expectations as we keep ratcheting our expectations up as well. We keep continuing to get more demand and on balance I think we are in a good shape. We've also announced a new plant which will significantly increase capacity but there are a number of actions between now and the new plant coming up for us to do that. Um, and therefore we should be able to deliver what we need to our customers.
It's a good headline number, 15,000 crores in Nagpur is the one that you're referring to right now. That's great. Got it. So give us some sense about it. I mean, what led to this kind of expansion, and how do the timelines work with such an expansion?
So this expansion has been in the works literally for the last couple of years. And just as perspective, we've gone from maybe about 19,000 SUVs a month as capacity roughly about 5 years ago to maybe 65 to 70,000 as capacity right now. So we've increased capacity quite dramatically already and that's what we often talked about a 4x increase in capacity or close to a 4x increase. From now we will continue increasing capacity further as well. But given the trajectory we've seen, given the demand we've seen for our products and a range of products that are coming in that we've announced — the Vision S, the Vision T, the Vision X — which will create, I would say, a very very strong set of offerings in the sub-4 meter range, we will need much more capacity for that. So therefore the expansion in Nagpur is essentially planned for us to be able to get that capacity. If we have to continue meeting expectations, we need the capacity to do that.
Okay. Would it become difficult to beat expectations on operational metrics? I don't know if I missed that answer on the margin front in the previous one, but one, the rising share of EVs, and the rising input costs – if I talk to steel makers or aluminum companies or copper companies, all of them talk about the cycle likely to continue for the next 12 to 24 months, nobody knows, but that's the guess. So assuming that that happens, right? How do you combat that? So we have been able to absorb most of it in our operating leverage
And we've shown, despite all those increases, a 90 basis point increase in margin for auto and a 240 basis point increase in margin for the tractor business. We also have announced a 1% price increase because we haven't factored all of that in there as yet. So as we look at it point to point over the last 6 to 8 months, we have seen a greater increase in commodity price, but we feel that a 1% price increase is sufficient in that sense, and that allows us to stay on track in terms of what we planned.
And you reckon that even if the trajectory on the input costs were to continue, slight incremental price increases coupled with the volume growth will do the trick for you?
That's right. So, we're not too worried about commodity price growth at this point in time.
And we can't forecast much of a
I don't think too many people can, but I was just trying to get you a sense of what the producers were saying because that's the best guess that I would have. Um, tractors, very strong numbers. If I remember correctly about a quarter ago when we spoke, you mentioned that while the going has been strong, if we have a good summer, then you are actually looking at a fairly good tractor demand in calendar year 2026. Does that stay on track? What are the initial reference points that you are seeing with regards to that segment?
So on that, the tractor demand over the last couple of quarters has been just off the charts, completely off the charts. And we were just talking at a media meet that we'd given a higher forecast for this year of low double-digit growth and it's likely to be double that. So the tractor forecast is a function of the rural economy, which right now is just absolutely gung-ho and growing at a very rapid pace. That said, we obviously do not expect such level of growth to continue. So for us, the longer-term forecast for tractors always is a high single-digit growth rate. And we have other growth levers that we deploy around farm machinery, around international, around profit growth, operating leverage, etc., that gets us to the results we need to deliver. But the industry is longer term a high single-digit growth rate and that's what we'd probably expect again going back to normal for next year. We may again be surprised positively with some of the momentum continuing but we're not sure at this point in time how far the momentum will continue.
