Mahindra & Mahindra Key Ratios

The significant increase in ROE from 9.14% in FY21 to 22.09% in FY23 is primarily driven by rising PAT margins, which improved from 2.44% to 8.48% over the same period, indicating enhanced profitability.Asset turnover also increased from 0.4657 to 0.6707, suggesting more efficient utilization of assets to generate sales, however, it slightly declined in FY24, reflecting potential operational challenges.Leverage decreased marginally, indicating that while the company's debt levels remain stable, the lessened reliance on debt suggests a more conservative financial strategy, contributing to the rise in ROE.

Inventory days decreased from 49.16 in FY21 to 41.11 in FY23, reflecting improved inventory management, despite a rise to 44.68 in FY24 which could raise concerns about stock turnover.Receivable days have consistently decreased from 30.68 to 19.36, indicating a stronger collection process and a more effective credit policy in place.Payable days have declined from 128.04 to 98.58, implying better supplier relationships but a slight increase in FY24, potentially impacting cash flow, while the cash conversion cycle remains negative, highlighting effective cash management.

ROE improved significantly from 9.14% in FY21 to a peak of 22.09% in FY23, driven primarily by increased profitability as evidenced by rising PAT margins, showcasing compelling equity efficiency.ROCE showed a similar upward trajectory, increasing from 9.46% to 15.02%, illustrating effective use of capital, including debt, to generate earnings.ROA also experienced improvement, reaching 6.04%, indicating strong overall asset efficiency, however, its peak in FY23 suggests that while profitability is robust, maintaining this across the asset base will be crucial moving forward.