1. Mahindra and Mahindra Q4 standalone net up 20% at Rs 725 cr

Mahindra and Mahindra Q4 standalone net up 20% at Rs 725 cr

Mahindra and Mahindra (M&M) on Tuesday reported a 19.93% y-o-y increase in standalone net profits to Rs 725.16 crore for the three months to March.

By: | Published: May 31, 2017 7:33 AM
Mahindra and Mahindra, M&M, EBITDA, Pawan Goenka, BS III vehicles, BS IV engines, Maruti, Hyundai, Tivoli platform, car maker Profits were partly supported by an exceptional gain of Rs 93.68 crore from the sale of long term investments.

Mahindra and Mahindra (M&M) on Tuesday reported a 19.93% y-o-y increase in standalone net profits to Rs 725.16 crore for the three months to March. Profits were partly supported by an exceptional gain of Rs 93.68 crore from the sale of long term investments. The Mumbai-headquartered company reported revenues of Rs 11,125.15 crore in the quarter, up 3.34% y-o-y. The firm’s stand-alone EBITDA (earnings before interest, tax, depreciation and amortisation) fell 4.58% y-o-y to Rs 1,032.14 crore and the operating margin contracted by 72 basis points to 9.28%.

The revenue from the automotive segment declined marginally by 0.56% y-o-y to Rs 8,910.72 crore while that for the tractor business increased by 3.99% y-o-y to Rs 3,011.08 crore. Revenues in the auto segment were adversely impacted by the ban imposed on the sale of BS III vehicles by the Supreme Court in March. According to Pawan Goenka, managing director, M&M the company lost around Rs 171 crore owing to the ban on BS III vehicles.

It still holds an inventory of 13,000 units. While most of vehicles will be exported, the remaining vehicles will be fitted with BS IV engines. Intense competition in the utility vehicle segment from Maruti and Hyundai also troubled the company but it hopes to tackle the competition with a new launch in the near future. “We have a market share of 30% in the UV space. Due to the entry of other players in this segment, it has been difficult to increase our market share. With one SUV expected this year, we plan to grow our market share by 1-2% very soon,” added Goenka.

M&M is tipped to launch a new MPV (code named U321) over the next one year; the product is to be rolled out from the Nashik plant. The company has announced an expansion in capacity at Nashik to 210,000 units from 160,000 units at present. The total amount of investment could be in the region of Rs 1,500 crore, which includes some capex on intangibles.

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M&M is expected to launch one product on Tivoli platform (S201) by 2HFY19.  Moreover, it is also tipped to come out with petrol models for the Scorpio and XUV5oo in FY2018. An all new 1.5 liter petrol engine will be launched in FY2019.

The company will also launch two new tractors (sub 30 HP and 50 HP) over the next 12 months. Analysts expect demand for tractors to remain strong next year on the back of a good monsoon last year and an optimistic forecast for the current year. They estimate volumes for the tractor segment at M&M will grow 10% in FY18.

At a consolidated level (M&M and MVML), the net sales for the quarter increased by 4.3% y-o-y to Rs 10612.11 crore while the net profit increased by 26.35% y-o-y to Rs 873.72 crore. In FY 17, the Mumbai based car maker at a stand-alone level reported an increase of 7.12% increase in net sales to Rs 43785.36 crore. While the net profit during the year increased by 13.95% to Rs 4050.53 crore.

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