THREE-YEAR BLOCKBUSTER: MAHINDRA & MAHINDRA :: Business Line

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The reasons for the superior returns clocked by the M&M stock are threefold.

One, the company operates in the utility vehicle (UV) segment, which both in 2008 and now, has handled the slowdown better than passenger cars.

Two, it derives about 40 per cent of its revenues from the sale of tractors, which have been on a high due to good agricultural growth, increased rural incomes and improving farm mechanisation. Tractors also enjoy superior margins to UVs, thus providing scope for overall margins to be higher.

Three, in the segments it operates, the company's product mix straddles across a wide range. For instance, it has products such as the Bolero, the Yuvraj tractor and a host of small commercial vehicles such as Gio, Genio and Maxximo at the lower end, as well as products at the premium end. This has helped M&M keep the volumes ticking as well as improve realisations.

The stock has also been aided by timely launches (such as Xylo, SUV500) at attractive price points. Acquisition of Ssangyong Motors (2010), which would extend its UV offerings into the premium segment, too has kept investor interest in the stock going. Its entry into the electric vehicles space in 2010 through the acquisition of Reva, a technology for which there is huge long-term potential, has also helped.