By Kritika Arora
Mahindra and Mahindra (M&M) on Wednesday reported a 23.8% year-on-year rise in standalone net profit at Rs 1,649.46 crore for the three months to September. The growth in revenues was just 6.7% y-o-y, but other income rose 51% y-o-y to Rs 846.3 crore.
The operating margins were down by 200 bps y-o-y at 12%. The results were ahead of Bloomberg consensus stand-alone estimate of Rs 1,293.5 crore.
While the company had earlier given guidance for tractor volumes at 12-14% for the current fiscal, M&M managing director Pawan Goenka said the volumes were likely to grow at 12% rather than 14%. In August, M&M had said the guidance for tractor volumes was being revised upwards to 12-14% from 8-10%.
Net sales during the quarter were up 6.7% y-o-y at Rs 12,998.57 crore on the back of increase in volumes at 1,41,163 units. The company reported an Ebitda (earnings before interest, tax, depreciation and amortisation) of Rs 1,605 crore, down 7% y-o-y. The margins were affected due to an increase in the cost of raw materials.
Goenka further said macroeconomic factors such as oil prices, exchange rate and interest rates and regulatory changes like axle load norms had impacted industry growth in Q1, but the impact had moderated significantly in the subsequent quarter.
The tractor industry has de-grown in Q2FY19 by nearly 3% compared with the year-ago period. In Q1FY19, the growth was 24% y-o-y. In Q1FY19, passenger vehicle sales rose 20% y-o-y while in Q2FY19, they fell 3.6% y-o-y.
M&M’s tractor sales, which account for almost 37% of its total revenues, were down by 4.5% for the September quarter at 73,902 units, partly due to the delayed festive season this year and the floods in Kerala.
While tractor volumes increased by 17% y-o-y at 46,312 units in October, they had fallen 19% y-o-y in September. “There is no major reason for the de-growth. Growth has been a little less than what we had expected, and with the festive season being passed on to Q3, we are expecting growth to be roughly where we anticipated, maybe slightly lower,” Goenka added.
The passenger vehicle industry witnessed a slowdown in Q2FY19 owing to multiple reasons ranging from rise in fuel prices, delayed festive season and increased insurance cost. The company witnessed a marginal 0.5% growth in sales sequentially. M&M’s market share at the end of the September quarter stood at 6.9%.
However, the commercial vehicle business has been faring well for the company with a growth of 10% sequentially.
M&M’s stock closed at Rs 770.40 on the BSE, down 2.62% over Tuesday’s close. The stock has lost 9.74% in the last six months.