M&M eyes four fold increase in valuation of growth gems to $17 billion by FY30

Mahindra & Mahindra expects the valuation of its growth gems to increase fourfold to $17 billion in the next six years. To support this growth, the senior management informed last week that M&M will invest Rs 5000 crore across businesses in the coming three years.

Speaking to analysts after the Q4 FY24 earnings announcement, Anish Shah, MD of Mahindra & Mahindra, said the Growth Gems' market cap has grown from roughly about $0.8 billion collectively in FY20 to $3.4 billion in FY23; that number is higher in FY24.

"We're looking at a significant rise in the 'Growth Gems' and are on a good path to that. I wouldn't expect a lot of profits in terms of Growth Gems every year because investments will translate into profits later, which is why you may see a slightly muted growth number for profits there. Still, it's one that we're looking at creating the business, setting them up well, and thereby being able to drive growth for us in the next decade," Shah explained.

M&M has defined eight to nine of its group businesses as growth gems, three of which are listed. Shah has reportedly said three to four of them will go for an IPO in the coming five years. The entities include Mahindra Last Mile Mobility, Mahindra Susten, Mahindra LifeSpaces, Club Mahindra, Mahindra Logistics, Mahindra Accelo, Car & Bike, Classic Legends, Mahindra Farm Machinery Business and Mahindra Aerospace.

By raising funds in these arms, the company has already unlocked value from Mahindra Last Mile Mobility and Mahindra Susten. It wants to accelerate the growth of Mahindra Lifespaces, Club Mahindra, and Mahindra Logistics.

It sees Mahindra Accelo, Car & Bike, Classic Legends, and Mahindra Aerospace as emerging businesses. It has set a target of growing all these businesses 5 times in the coming five years.

"Logistic business execution has improved, and we expect a much stronger year for the logistics business. For Susten, we expect to grow the business by 7 to 10X. Hospitality is on a strong track. Last Mile Mobility continues to be strong. So many of our growth gems are delivering at a very high rate now," added Shah.