Mahindra Plans Up To Rs 25,000 Cr Capex by FY2028 as ICRA Reaffirms AAA Rating

ICRA has estimated that Mahindra plans to deploy capital expenditure between Rs 20,000 crore and Rs 25,000 crore across its automotive and farm equipment segments over FY2027 and FY2028, as the credit rating agency reaffirmed its ratings for the automaker.

ICRA upheld its AAA rating with a stable outlook for the long-term borrowing programmes of Mahindra, alongside reaffirming its A1+ rating for short-term facilities.

The capital expenditure will be financed via internal accruals and liquid reserves to support product development, scaling electric vehicles and manufacturing footprint additions, including a proposed greenfield facility at Nagpur.

ICRA also highlighted operational and financial headwinds, led by intense competition in the SUV segment where entry of rival models and limited initial presence in the compact segment saw M&M's share decline from 25.4% in FY2018 to 15.0% in FY2022 before rising to 20.3% in Q1 FY2027. In addition, select international subsidiaries and loss-making overseas operations continue to require funding support.

The ratings review covers total rated debt and bank facilities aggregating Rs 1,150 crore, comprising a Rs 500 crore non-convertible debenture programme, Rs 6.25 crore in long-term non-fund based facilities, and Rs 643.75 crore in short-term non-fund based instruments.

The reaffirmation reflects the company's healthy operational cash flows, positioning across domestic tractors and utility vehicles, and strong liquidity backed by sizeable cash reserves and an extensive quoted investment portfolio.