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HDFC Securities Report
Mahindra & Mahindra Ltd. reported a weak Q1 (Profit after tax of Rs 389 million, down 96% YoY), impacted by the automotive segment.
While tractor outlook remains upbeat due to encouraging monsoon trends, the demand for SUVs continues to be impacted by intense competition (multiple new competitor launches are lined up).
Automotive/tractor volumes were down 77/24% YoY. Revenue declined 56% YoY to Rs 55.8 billion. Ebitda margin at 10.3% contracted 375/340 basis points YoY/QoQ owing to negative operating leverage.
Profitability at the tractor division improved with Ebit margin at 20.4% (up 280 basis points QoQ). Automotive segment reported an Ebit loss of Rs 5.8 billion.
M&M continues to focus on efficient capital allocation (targeting return on equities of 18% across business lines) and is seeking partners for SsangYong Motor Company and electric vehicles segment.
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