M&M Q1 Results: Profit Before Tax And One-Time Items Falls, Revenue Declines
Second Covid wave, supply issues hurt M&M in Q1.
Mahindra & Mahindra Ltd.’s first-quarter profit before tax and one-time items declined as demand eased during the second wave of the pandemic and the company continues to face supply-side issues.
Net profit before tax and exceptional item for the sports utility vehicle maker stood at Rs 1,206 crore in the April-June period, down 13% over the preceding three months, the company said in an exchange filing.
M&M reported an impairment worth Rs 78.5 crore on long-term investments during the quarter.
Adjusted for the exceptional item, net profit stood at Rs 856 crore in the quarter ended March, compared with Rs 163 crore in the preceding quarter. A consensus of analysts tracked by Bloomberg had pegged the bottom line at Rs 1,094 crore.
To be sure, M&M received the approval of the National Company Law Tribunal for the merger of Mahindra Vehicle Manufacture Ltd. with the company.
Q1 Key Highlights (QoQ)
Revenue fell 12% to Rs 11,763 crore, compared with the Rs 12,360-crore forecast.
Ebitda down 17% to Rs 1,632 crore, against the projected Rs 1,693 crore.
Ebitda margin contracted to 13.9% from 14.7%. Analysts had pegged the metric at 13.7%.
"The demand for our key automotive products also remains strong. With upcoming launch of our most anticipated product XUV700, we plan to ride on the festive season with strong volume growth aided by rebound in Indian economy," Rajesh Jejurikar, executive director-auto and farm sector at M&M, said in the earnings statement. Mahindra's tractor unit continue to deliver robust performance both in terms of market share and financial metrics.
Commodity inflation and semiconductor supply issues continue to be of concern.
Prolonged supply-side constraints, coupled with second wave restrictions dragged M&M’s overall automotive sales by 20% over the preceding quarter to 86,848 units in the April-June period.
Sales of its passenger cars fell 18% sequentially to 43,202 units compared with a decline of 25% decline in Maruti Suzuki India Ltd.’s shipments and 41% in Tata Motors Ltd.’s domestic business.
M&M’s tractors sales, however rose 6.4% sequentially to 99,929 units in the reported quarter.
M&M has been grappling with supply-chain bumps ever since the lockdown restrictions were eased in 2020. In December, it had warned of a global shortage of semiconductors supplied by Bosch Ltd., which hurt its production and sales when demand for cars rose on preference for personal mobility and the festive push. Its tractor and three-wheeler production, however, remained unaffected.