M&M Q2 Results: Profit Dips 3%, Revenue Up 6% On Stellar Tractor Sales

India’s biggest tractor maker saw its quarterly profit fall even as tractor sales rose on better rural demand.

Net profit of Mahindra and Mahindra Ltd. fell 3% year-on-year to Rs 1,311 crore in the July-September period, according to an exchange filing. That compares with the Rs 1,040-crore consensus estimate of analysts tracked by Bloomberg. The bottom line excludes an exceptional item worth Rs 770.06 crore.

Its revenue, however, rose 6% to Rs 11,590 crore, against the Rs 11,230 crore forecast.

M&M Q2 Results 2020-21: Key Highlights (year-on-year)

• Net profit fell 3% to Rs Rs 1,311 crore.

• Revenue rose 6% to Rs 11,590 crore.

• Ebitda up 34% to Rs 2,063 crore.

• Ebitda margin at 17.8% versus 14.1%.

India’s automobile sector was battling a protracted slowdown before Covid-19 pandemic struck. The nationwide lockdown led to a washout in the initial months but sales recovered gradually after the curbs were lifted. Tractors witnessed a faster recovery than other categories as normal monsoon and pent-up demand in India’s hinterland ahead of the sowing season helped.

India’s tractor industry, according to M&M’s statement accompanying the results, had its best ever July-September quarter in terms of sales, which rose 41.4% over the year earlier. The company now expects the momentum to continue into the ongoing festive season. M&M, too, sold more tractors than passenger and commercial vehicles in the reported period.

M&M Sales in Q2 FY21 (year-on-year)

• Vehicles sold: 87,332 units versus 110,824 units.

• Tractors sold: 89,597 units versus 68,359 units.

• Total exports: 7,103 units versus 10,540 units.

In the passenger vehicle segment, M&M has launched the all-new Mahindra Thar 2020. This has piqued the interest of Indian automotive enthusiasts as more than 15,000 units of the off-roader have been booked so far, while deliveries commenced only recently. M&M has stepped up production of the vehicle to cater to this demand.

But M&M’s commercial vehicle segment remained under pressure as sales of its trucks and buses fell 40.5% from the year earlier to 23,936 units in the second quarter.

Shares of M&M are trading 0.53% higher in the afternoon trade compared with a 1.37% gain in the benchmark Nifty 50.