Mahindra & Mahindra Q2 profit rises 9.7 pct at Rs 989 cr, beats estimates despite SUV sales slowdown

Written by Agencies | New Delhi | Updated: Nov 14 2013, 20:36pm hrs
Mahindra SUVNet sales of Mahindra and Mahindra during September quarter were at Rs 8,814.33 crore, down 8.74 per cent from the same period last year. (Reuters)
Mahindra & Mahindra Ltd, India's largest utility vehicle maker, posted a better-than-expected 10 per cent rise in quarterly (Q2) profit as lower costs and strong demand for its tractors made up for slowing SUV sales.

Mahindra & Mahindra today reported an increase in standalone net profit at Rs 989.5 crore for the quarter ended September 30, aided by lower expenses.

Mahindra & Mahindra had reported a profit of Rs 901.8 crore a year earlier.

Mahindra & Mahindra net sales during the three months ended September 30 were at Rs 8,814.33 crore, down 8.74 per cent from Rs 9,659.2 crore in the same period last year, M&M said in a BSE filing.

Expenses were at Rs 7,981.64 crore, down 10.04 per cent from Rs 8,872.43 crore.

Mahindra & Mahindra shares traded at Rs 885.85 in the afternoon on the BSE, up 0.75 per cent.

Read the full statement from the Mahindra & Mahindra on the September quarter results:

The Board of Directors of Mahindra and Mahindra Limited today announced the unaudited financial results for the quarter ended 30th September 2013 for the company.

Mahindra Vehicle Manufacturers Limited (MVML), located at Chakan near Pune, was set up as a 100% subsidiary of the company with a view to sourcing contemporary products for expanding the market offerings of the company. Hence it is a critical part of its business and only the combined results of the company and MVML can provide a comprehensive view of companys performance.

* Q2 F2014 M&M + MVML results

The Gross Revenues and Other Income of Mahindra & Mahindra Ltd. and MVML (Entity) for the quarter ended 30th September 2013 is Rs. 9887.6 crore as against Rs. 10786.7 crore during the corresponding period last year. The Net Profit before tax for the current quarter is Rs. 1303.6 crore as against Rs.1327.2 crore in Q2 previous year. After providing for tax, the profit is Rs. 1027.6 crore against Rs. 978.1 crore in Q2 last year - a growth of 5.1%. The operating margin of the Entity for the current quarter is 14.5% as compared to 13.8% in Q2 last year.

The deceleration in the Gross Revenues in the quarter is due to the challenging times the Indian auto industry, with volumes shrinking by 4% during Q2, is currently passing through. Despite this, the entity could deliver a growth in the profits in the quarter due to a strong sales performance by its Farm Equipment Sector and a tight control on material costs and all expenses.

In the Passenger Utility Vehicle segment, the Entity sold 47388 vehicles in the current quarter with a market share of 39.6%. In the Cars segment, the Entity sold 2879 Verito and Verito Vibe Cars. The Entity also exported 8059 Vehicles in Q2 F2014.

In the wake of a good monsoon, the domestic tractor industry continued to show robust growth with sales of 141171 tractors in Q2 F2014 against 116524 tractors sold in Q2 F2013 - a growth of 21.2%. In this period, the Companys domestic sales at 57549 tractors grew by 22.3% over the 47065 tractors sold in Q2 last year. Companys market share was 40.5% as against 40.2% in Q2 last year. Mahindra Powerol posted net revenue of Rs.171.1 Crore in Q2 F2014 as against Rs.217.7 Crore in Q2 last year.

* Q2 F2014 M&M Standalone results

The Gross Revenues and Other Income of Mahindra & Mahindra Ltd. for the quarter ended 30th September 2013 is Rs. 9890.6 crore as against Rs. 10891.4 crore during the corresponding period last year. The Net Profit after tax for the quarter is Rs. 989.5 crore as against Rs. 901.8 crore in the same period last year a growth of 9.7%.

* H1 F2014 M&M + MVML Results

The Gross Revenues and other income of the entity during the half year ended 30th September 2013 is Rs. 20689.1 crore as against Rs. 20790.6 crore in the corresponding period previous year. The Profit after tax for the current H1 is Rs. 1937.3 crore as against Rs. 1756.6 crore in H1 previous year a growth of 10.3%. The operating margin of the Entity for the first half of the year is 14.5% as compared to 13.9% in H1 last year.

* H1 F2014 M&M Standalone Results

The Gross Revenues and other income of Mahindra & Mahindra Ltd. during the half year ended 30th September 2013 is Rs. 20778.4 crore as against Rs. 21007.2 crore in the corresponding period previous year. The Profit after tax for the current H1 is Rs. 1927.4 crore as against Rs. 1627.4 crores in H1 previous year a growth of 18.4%.

* Q2 F2014 Group Consolidated Results

The consolidated Gross Revenues and Other Income of the Group for the Quarter ended 30th September 2013 grew by 3.9% to Rs. 18675.6 crore (USD 3.3 billion) from Rs.17973.4 crore (USD3.2 billion) in Q2 last year. On account of a change in the status of Tech Mahindra from a Joint Venture to an Associate effective 31st Aug 2012, the revenues reported above include M&Ms share of Tech Mahindra revenue for 2 months only in Q2 F2013. On a like to like basis the growth in the consolidated revenues in the current quarter is 6.6% over Q2 F2013. The consolidated profit after tax before minority interest for the current quarter is Rs. 927.4 crore (USD 163.6 million) as compared to Rs. 786.8 crore (USD 138.8 million) in Q2 previous year a growth of 17.8%. After deducting minority interest, the profit after tax for the current quarter is Rs. 835.7 crore (USD 147.4 million) as compared to Rs.798.7 crore (USD 140.9 million) in the previous year.

The Groups recent acquisition Ssangyong Motor Company Limited, S. Korea, which had broken even in Q1, continued its profitable ways with a 20% growth in consolidated revenues and a 114% growth in results. The performance of Tech Mahindra with a 39% growth in consolidated revenues and a 58% increase in profits and that of Mahindra Finance with a 32% growth in consolidated revenues and a 21% growth in profits, were particularly noteworthy.

* H1 F2014 Group Consolidated Results

The Gross Revenues and Other Income for the half year ended 30th September 2013 grew by 10.4% to Rs. 38031.6 crore (USD 6.7 billion) from Rs. 34455.8 crore (USD 6.1 billion) in H1 last year on a comparable basis. The consolidated Profit after tax before minority interest for the current half year is Rs 1980.7 crore (USD 349.4 million) as against Rs 1806.5 crore (USD 318.7 million) in H1 last year a growth of 9.6%. After deducting minority interest, the profit after tax for the current Half year is Rs. 1803.8 crore (USD 318.2 million) as compared to Rs.1825.1 crore (USD 321.9 million) in the same period of previous year.

The Group as on 30th September 2013 comprised of 130 Subsidiaries, 7 Joint Ventures and 10 Associates. A full summation of Gross Revenues and other income of all the group companies taken together for H1 F2013 is Rs. 47442.7 crore (USD 8.4 billion).

* Outlook:

The Indian economy continues to struggle. With domestic demand weakening and manufacturing activity stagnating, growth in the first quarter of F2014 dropped to 4.4% and is likely to see only marginal improvement, if at all, in the second quarter. At the same time, inflation remains high and rising, limiting the space for growth supportive monetary policy action. Nevertheless, we expect the economy to perform better in the second half of this fiscal. First, as a result of both domestic policy actions and the US Fed maintaining status quo, near term balance of payments risks facing the Indian economy have eased, stabilizing the Rupee and thus limiting cost-push inflationary pressures on the economy. Second, the robust agricultural harvest expected in the coming months is likely to dampen inflation while simultaneously boosting rural output, incomes & demand and thereby, productive activity in other segments of the economy. Finally, with the advanced economies recovering, and the rupee no longer over-valued, exports should pick up speed in the coming quarters. Given these encouraging pointers, our current outlook on the economy is one of cautious optimism.