00:00 What was supposed to be a refresh has turned out to be an overhaul.
00:04 Mahindra has launched the 3XO, essentially replacing the XUV300 in the compact SUV space.
00:11 But first, essentially it's disrupting the market.
00:14 But first, let's look at what the compact SUV space looks like.
00:18 In FY24, 25.2 lakh SUVs were sold in India, of which 12.5 lakh were subcompact SUVs, essentially
00:26 SUVs of less than, of length less than 4 metres.
00:30 If you talk about the main competitors for the XUV300, here they are.
00:36 The Maruti Suzuki Brezza was the number one compact SUV, subcompact SUV in FY, in 2023
00:42 with 1.7 lakh units sold.
00:44 Tata Nexon was close behind at 1.7 lakh and just a few change here and there.
00:50 The Mahindra XUV300 is right there at the bottom at 59,315 units.
00:56 Now Mahindra wants to change that with the pricing that they have announced for the 3XO.
01:03 So if you look at the pricing, Maruti Suzuki Brezza is at 8.19, 13.88.
01:09 Tata Nexon is at 8.15 starting.
01:12 But look at Mahindra XUV300, 3XO, that's at 7.49 lakh units.
01:17 So essentially Mahindra is targeting its competitors on the product pricing as well as the positioning
01:23 front.
01:24 So if you look at the product, it's loaded with features, so to speak, packed to the
01:30 gills.
01:31 As standard, it gets six airbags, discs all around on 17-inch wheels.
01:37 As standard, a panoramic sunroof segment first, as well as infotainment, larger infotainment
01:43 system.
01:44 The base model is actually priced 60,000 rupees less than the comparative base model for the
01:49 Nexon and Brezza.
01:51 In the mid-tier, which is priced at about 10.5 lakh rupees, gets a bigger infotainment
01:55 unit and more features.
01:58 There, the 3XO undercuts the Brezza and the Nexon by about 1 lakh rupees.
02:08 Mahindra has also done a segment first by launching a petrol automatic at less than
02:13 10 lakh rupees.
02:14 All of this adds up to the fact that Mahindra wants to disrupt this space, a space which
02:20 it has been so far absent.
02:22 Essentially Mahindra has been the revenue market leader so far in the SUV space.
02:27 It now wants to play the volumes game.
02:29 Essentially they will also, what analysts are now saying that this will actually, this
02:35 particular product will actually double the company's sales going forward.
02:39 Puneet, you have talked to the analysts, you have read the reports, what do they have to
02:43 say?
02:44 Well, essentially taking forward the point that you were making, it's a disruptor in
02:49 the space where it's not been present for so long.
02:52 If you look at the parameters of engine efficiency, we look at how it comes across versus competitors.
03:02 Now Exeter and Punch are the ones which are present in the micro SUV space, which roughly
03:07 comes between the 4 to 7 lakh range as a starting point and goes all the way up to the 10 lakh
03:13 mark where it competes with the likes of Brezza.
03:15 But when you look at the 3XO, a strong mileage per kilometre coming at 20.1, essentially
03:22 competing with its direct, one of the direct competitors, which is Punch, as well as providing
03:27 a better fuel efficiency than someone like in Exeter.
03:30 If you move forward, we see the leading models as we highlighted before, the top six, but
03:35 let's look at how they've done on a monthly volume as well.
03:38 Roughly 10 to 14,000 seen across its players.
03:42 We've seen on a 12-month basis, as Prashant highlighted, that the Brezza as well as the
03:45 Nexon and the Punch have been clocking in roughly 1.7 lakh units.
03:51 And now incrementally, we are seeing that the Bolero, which is part of the M&M foray
03:55 as well, caters to a different market, but they are present here with a 9% market share.
04:00 But essentially what this is saying that if M&M is even starting with roughly 6,000 to
04:05 8,000 units per month, it can go up all the way till the 10,000 to 15,000 range, which
04:09 can add to its already selling roughly 68,000 vehicles per month, which will be a key product
04:15 driver.
04:16 Now, when we look at brokerages, what are they saying?
04:18 Nomura currently has a buy rating with a target price of 2,143.
04:23 They've essentially highlighted that the product should go up to roughly 9,000 units very,
04:28 very quickly and can go up to 10,500 with just a few investments.
04:32 This would add roughly 1.2 lakh units to its already strong product pipeline, but cater
04:38 to a different segment that it's absent in.
04:42 This segment, as Prashant highlighted, it sells roughly 6 lakh vehicles.
04:45 We've seen amongst the players how their division is.
04:48 So a key market that it was absent in, it will gain share and add to its monthly volumes.
04:53 It can increase this to, as mentioned, starting with roughly 6,000 to 8,000 and go up as well.
04:59 The entry level petrol and the diesel variant is roughly 50,000 to 23,000 lower compared
05:05 to the previous version, the XUV300, which also caters well.
05:10 This could lead to a re-rating for the company, as highlighted by Nomura.
05:16 They've also said that the company has said that they're targeting to be the number one
05:20 and two player, currently it's at five in this segment.
05:23 While it can also lead to high, currently it will lead to slightly lower gross margins,
05:30 but operating leverage benefits should be a key positive for the company.
05:35 When you look at the current EV by EBITDA multiples, it's at roughly 10.5 times lower
05:39 than its peers, which are trading at 15 times, while the SUV sales estimates for this particular
05:45 financial year of 2025 by Nomura is at 4,88,000, which could go up to 5,71,000 units.
05:52 So overall, really, really strong product profile for the 3XO, as we've seen, bookings
05:58 start in the later, in the month of May, and strong booking numbers would be a key question,
06:05 which I'm pretty sure the analysts would be asking in the conference call as well.
06:08 But to sum it up, really, really strong product profile from Mahindra and Mahindra.
06:13 Thank you so much, Puneet.
06:15 So essentially, this is what is giving Rajesh Jaijirikar, the CEO of Mahindra Auto, the
06:21 confidence to deliver industry-beating growth in FY25.
06:26 If that happens, let's see what happens in that sense.
06:29 [MUSIC]
Comments