Mahindra and Mahindra (M&M) has launched ‘Quanto’, a mini SUV at a price range of INR 582,000- 736,000 (ex-showroom Thane). The price is in-line with our expectations though it is higher than the rumoured INR500,000. The company wants to target customers willing to upgrade to entry level sedans. Success of this new product should further strengthen M&M’s position in the fast growing utility vehicle (UV) segment and compensate for the current weakness in the tractor segment. We recommend ‘BUY’ with a target price of INR839.
�� -->
�� -->
Key highlights of ‘Quanto’
• M&M is targeting customers willing to upgrade to entry level sedans. Quanto’s price is ~INR30k-50k cheaper than Maruti Suzuki’s Dzire. Compared to Maruti Ertiga, Quanto is significantly cheaper by ~INR160-190k.
• Quanto shares the platform with Xylo and Genio models. The front styling of Quanto is very similar to Xylo.
• The Mahindra Quanto is powered by a 1.5-litre, 3-cylinder, mCR100 diesel engine with Micro Hybrid technology. The 1493cc motor uses a twin-stage turbo to produce 100 BHP of peak power at 3750 RPM and 240 Nm of peak torque between 1600-2800 RPM.
• Despite sub-four meter length, Quanto is a seven seater UV where the last two seats are foldable.
• M&M has a combined production capacity 7,000 units/month for Quanto and Xylo. (Xylo has average sales of 2,000 units/month). We have built in average monthly sales of 1200 units for FY13 and 2,000 units for FY14.
• M&M has invested less than INR1bn on the Quanto project.
• As against INR5.5bn spent on Xylo, only INR1bn has been spent on Quanto. Even if we assume 2,000 units p.m. sales and a peak volume of 3,000 units by 2020 (one month working capital, 6% EBITDA margin), Quanto could still generate an IRR significantly higher than the cost of capital.
• We have ‘BUY’ rating with a TP of INR839.
Regards,
Mahindra has always kept the concept of huge size with adequate price in its cars and Indians just love it.I think that India need a compact family car which should be more spacious than hatchback and less than size of a SUV.Quanto suits to this measure exactly.
ReplyDelete