Shares of M&M hit a record high of Rs 1,247 per share as they climbed 7% on BSE on Monday, surpassing their previous high of Rs 1,192.55, reached on July 20, 2022. The company, Saturday saw 100,000 bookings for the all-new Scorpio-N within 30 minutes of the start of bookings – over 25,000 bookings within 1 minute – translating to an ex-showroom value of almost Rs 18,000 crore (2 .3 billion dollars).
The company said that deliveries of the all-new Scorpio-N will begin on September 26, 2022. Over 20,000 units of the all-new Scorpio-N are expected to be delivered by December 2022, with the Z8L variant taking priority. M&M had launched Scorpio-N on June 27 at an ex-showroom price of Rs 12 lakh-21.5 lakh – a launch price applicable only for the first 25,000 bookings.
While Axis Capital analysts believe there could be some duplication of bookings and cannibalization with XUV7oo, they are “positively surprised by the strong customer response for Scorpio-N”.
“We are a little cautious and building 60,000/72,000 units for both Scorpio models combined for FY23E/24E taking into account some cannibalization with XUV7oo. up 45%/12% YoY other,” he said.
In the past two years, this is the third consecutive successful launch of an SUV model by M&M after Thar and XUV7oo. M&M will also continue to offer the existing Scorpio Classic model (currently 3,000-4,000 monthly volumes) and is targeting 8,000-10,000 monthly volumes for the two models combined.
“Back-to-back successful SUV launches in highly competitive segments should ease investor concerns about the sustainability of the company’s SUV franchise. M&M continues to undergo a significant metamorphosis, as evidenced by its increased focus on large SUVs, efforts to increase presence in electric vehicles (EV) and greater ambitions in agricultural implements Its capital allocation policy has come a long way, from investing in unrelated segments and corporate loss-making foreign automakers to monetizing and exiting non-core businesses and securing external financing for electric vehicles,” Axis Capital said. The brokerage reiterates ‘BUY’ with a target of Rs 1,450.
For July, Nomura analysts expect M&M commercial vehicle (CV) volumes to grow 30% year-over-year on a strong model cycle and backlog. He expects M&M’s tractor volumes to be down 16% year-on-year on a high basis.
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