Mahindra & Mahindra’s Profit Jumps On Festive Demand, Good Monsoon
Mahindra & Mahindra’s Q2 net profit rose 24.6 percent to Rs 1,330 crore.
Mahindra & Mahindra Ltd.’s profit rose meeting analyst estimates, driven by demand for its utility vehicles and tractors during the festive season.
The Anand Mahindra-led automaker’s net profit rose 24.6 percent year-on-year to Rs 1,330 crore during the three months ended September, according to its stock exchange notification on Friday. That compares with the Rs 1,300 crore consensus estimate of analysts tracked by BloombergQuint.
“The Indian business reported a 13 percent growth, driven by overall monsoon, overall positive sentiment across urban and rural India and the festive season,” the company said in a media statement.
Revenue rose 14 percent year-on-year to Rs 12,182 crore, slightly below the Rs 12,350 crore forecast.
M&M’s operational performance improved as earnings before interest, tax, depreciation and amortisation rose 35 percent on a yearly basis to Rs 1,923 crore. Operating margin expanded to a record 16 percent from 14.1 percent last year.
“There was a smooth transition towards the GST, something we were quite concerned during the previous quarter,” Managing Director Pawan Goenka said during the earnings press conference.
1:1 Bonus Share Issue
The company’s board approved a bonus of one share for every share held, according to a separate exchange notification.
Shares of M&M rose 3.7 percent, the most in nearly a month, after the announcement. That compares with a 0.7 percent decline in the S&P BSE Auto Index as of 2:30 p.m.
Segment Performance
- Revenue from the automotive segment rose 15.7 percent year-on-year to Rs 7,774 crore.
- Revenue from farm equipment rose 23 percent to Rs 3,958 crore.
- Revenue from other segments fell 3.3 percent to Rs 410 crore.
- Sales of passenger vehicles rose 13.4 percent; it sold 27 percent more utility vehicles compared to a year ago in the September quarter. Medium and heavy commercial vehicle sales rose 30.6 percent.
- Domestic tractor business grew 37 percent on a yearly basis, as normal monsoon strengthened the demand.
The results include company’s two-wheeler subsidiary Mahindra Two Wheelers Ltd.’s business.
Highlights From Management
- M&M does not see any headwinds for either the automotive or tractor business in the second half of the financial year, Goenka said.
- The company reduced losses significantly in the two-wheeler business.
- It has put on hold plans to bring Peugeot scooters to India.