Mahindra Mobility Services Eyes Four-fold Increase In M-cap In 5 Years

Mahindra Mobility Services, the recently created umbrella entity that houses Mahindra Logistics, Mahindra First Choice Wheels, Zoomcar, Porter and Meru is looking at a 4x growth in its market capitalisation over the next five years.

This will be largely driven by Mahindra Logistics and unlisted entities in the mobility services space, said a top official at the group.

The Mahindra Group created the entity in April this year with the objective of lending a sharper focus on all the service related businesses and appointed V S Parthasarathy as its president. Parthasarathy was the chief financial officer and CIO (Chief Investment Officer) for the group till recently.

Over the last three to four years, the $20.1 billion group has either acquired or financially backed several firms which it considers to be of strategic importance as it seeks to capture the entire value chain in the rapidly changing mobility landscape—in people and goods transportation space.

Parthasarathy said the focus of the mobility business is to provide innovative, technology-driven solutions for efficient movement of people and goods. “It may not be a good idea to house both products and services in one company if one is looking to scale up the services business,” he said.

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“We have a vision of taking the combined market cap of these businesses to Rs 20,000 crore by 2025,” he said.

Currently, the combined m-cap of these business is Rsv 5000 crore to Rs 6000 crore. Of the aforementioned companies, Parthasarathy is betting big on the logistics a segment, which he expects to grow exponentially over the next five years as various infrastructure projects in the country come to fruition.

V G Ramakrishnan, MD and managing partner at Avanteum Advisors LLP says the key to this valuation is what the brand can deliver to the consumers. “The latter is least bothered about the ownership of the asset as long as the brand is trustworthy and can offer the value proposition,” he said. The business dynamics for the used car business and Mahindra logistics is very different and it’s not clear what the two will gain by sharing the same umbrella, he said. “I don’t what is the common thread between the two.”

Mahindra First Choice Wheels (MFCWL), the used car business of the Mahindra Group, that boasts of close to 1000 outlets will be yet another firm that is expected to drive the combined value of the entity. It is expected to enter the coveted unicorn club over the next five years and have an marketcap of a billion dollars.

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“For the last couple of years, it has seen a compounded annual growth rate of 60 per cent,” said Parthasarathy, adding that the company is looking to raise some $10 million to add to the digital play and scale it up.

In January this year, MFCWL acquired Fifth Gear Ventures, a company that owns carandbike.com, an e-commerce market platform that facilitates sales and purchase of new and used vehicles, with the objective of expanding its presence in the digital automotive space and seamlessly integrating the online and offline user experience.

“Carandbike.com will serve as an engine for anyone looking to buy used or new vehicles and will be play an important role in the digital strategy,” he said. On an average, the site gets 15 million visitors a month. The idea now is to not only increase this further, but also convert it into transactions, said Parthasarathy.

Meanwhile, the mobility services businesses including Meru, Zoomcar and Porter are also expected to contribute. While Meru Cabs, the ride hailing firm in which Mahindra controls 55 per cent, will sharply focus on employee transportation, Zoomcar – the self drive car rental platform and Porter that provides intra-city logistics solutions for businesses will continue to run independently with Mahindra group’s financial backing, he said.