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    Mahindra identifies 9 ‘inhouse unicorns’ for growth, listing

    Synopsis

    Mahindra confirmed that the timeframe for initial public offerings of the in-house unicorns is over the next two to five years. These businesses “have created strong capabilities that can provide a platform for significant growth”, a company spokesperson said in a reply to ET queries.

    MahindraAgencies
    The company’s US experiments have failed financially and its Peugeot collaboration is yet to yield results.
    Mumbai: Mahindra Group has identified nine businesses as the next set of growth engines — each having a potential to achieve $1 billion in sales and expected to be primed for public listing in the next 2-5 years.

    The group is working on scaling up these ‘inhouse unicorns’ — some even loss-making businesses — while ensuring consistent performance including profits to enhance their value before tapping the stock markets. Simultaneously, it will scale down on some other businesses either by stake reduction or exiting entirely, to improve shareholder value, people privy to the conglomerate’s plans told ET.

    As per the blueprint, businesses like steel processing arm Mahindra Accelo, used car business First Choice, electric vehicles arm, mobility business, agribusiness, rural housing, two-wheeler maker Classic Legends that resurrected cult motorcycle brand Jawa, solar equipment and project service arm Mahindra Susten, and diesel genset maker Mahindra Powerol have been identified by the group’s new deputy managing director Anish Shah, they said.

    Mahindra confirmed that the timeframe for initial public offerings of the in-house unicorns is over the next two to five years. These businesses “have created strong capabilities that can provide a platform for significant growth”, a company spokesperson said in a reply to ET queries.

    The group currently has seven listed entities — the flagship Mahindra & Mahindra, IT company Tech Mahindra, Mahindra Finance, hospitality business Mahindra Holidays & Resorts India, Mahindra Logistics, Mahindra Lifespaces and EPC. “We have built businesses in the past with significant value creation while maintaining strength in our core businesses. We need to deliver both growth and ROE for our shareholders,” the spokesperson said.

    During the FY20 results conference, Shah had said businesses with a strategic fit and a clear path to 18 per cent return on equity within five years would be retained. Analysts tracking the company said businesses likely to face the axe include trucks, yacht and aerospace, which lack a strategic fitment or have been making losses for years.

    Although Mahindra Electric and Mahindra Agri Solutions are currently loss-making, they would continue to be funded due to their strategic importance, sources cited earlier said. “While Mahindra’s EV business has picked up from lower levels, it is struggling due to delay in government orders and slower electrification trend,” said Mitul Shah, vice president — research, Reliance Securities.

    Mahindra First Choice (MFC) reported income worth 373 crore in FY20 with positive Ebitda margins. “Consumer transition to pre-owned cars due to Covid-19 is helping MFC in building trust and creating transparency for customers,” said Mahantesh Sabarad, retail head at SBI Cap Securities.
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    Some experts said Mahindra is focusing on Indian businesses as the group has not succeeded in its global ventures with losses standing at 5,257 crore in FY20, from 53 crore in FY17. The company’s US experiments have failed financially and its Peugeot collaboration is yet to yield results.

    Kaushik Madhavan, vice president, mobility practice, at Frost & Sullivan, said Mahindra’s objective is to strengthen core businesses in the medium term to improve cash flow, with diversification being a long-term move.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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