A Mahindra & Mahindra Ltd. e2o electric automobile stands on display during its U.K. launch in London, U.K. (Photographer: Simon Dawson/Bloomberg)

Q4 Results: M&M Profit Beats Estimates On Exceptional Gain

Mahindra & Mahindra Ltd.’s profit surpassed analyst estimates in the quarter ended March on the back of an exceptional gain.

The Anand Mahindra-led automaker reported a net profit of Rs 1,155 crore for the January-March period, an increase of 50 percent from the year-ago period, according to its stock exchange notification. That compares with the Rs 1,050 crore consensus estimate of analysts tracked by Bloomberg. The bottom line was boosted by an exceptional gain of Rs 47.86 crore.

Revenue of the company rose 25.6 percent year-on-year to Rs 13,189 crore driven by the farm equipment segment.

  • Revenue from the farm equipment segment rose 33 percent year-on-year to Rs 3,716 crore.
  • Revenue from the automotive segment rose 2.5 percent to Rs 9,136 crore.

Also read: Mahindra Revamps XUV 500 To Regain Top SUV Maker Spot

Its operational performance beat estimates despite higher commodity costs. Operating income or the earnings before interest, tax, depreciation and amortisation rose 70.4 percent on a yearly basis to Rs 1,995 crore, compared with the Rs 1,880-crore estimate. Operating margin expanded to 15.1 percent from 11.2 percent during the period, compared with the forecast of 14.4 percent.

M&M expects 8-10 percent growth in tractor sales and 10-12 percent growth in commercial vehicle sales in the current financial year, Managing Director Pawan Goenka told reporters in a press conference.

Key highlights from the conversation:

  • Monsoon and pickup in infrastructure spends will drive sales growth
  • Rising oil and commodity prices to impact the industry.
  • Tractor sales in the current quarter is expected to grow between mid teens and high teens.
  • Rural markets should do well for the company, given distribution strength.
  • Expects pick up in utility vehicles segment market share after new launches.

Domestic brokerage Sharekhan said that it might raise the company’s earnings estimates based on reported earnings and management commentary but cautioned that margins may not be sustainable. “The company might face margin pressure and might not be able to sustain it going forward due to increase in commodity prices.” Bharat Gianani, research analyst at the brokerage said.

Shares of the automaker extended gains and rose as much as 2.1 percent to Rs 868 apiece after the results announcement. The stock fell 1.6 percent in the quarter ended March compared with a 3.9 percent decline in the benchmark NSE Nifty 50 Index.