 "Exceptional gain bumps up M&M's Q3 PAT")
Good days seem to have eluded Mahindra & Mahindra (M&M) in the December 2014 quarter, with volumes of both utility vehicles and tractors continuing to decline. The company’s shares rose five per cent on Friday, as the net profit at Rs 967 crore was well ahead of the Street’s estimated Rs 660 crore. This was due to an exceptional gain of Rs 299 crore derived from the merger of Mahindra Engineering Services, a subsidiary of M&M, with Tech Mahindra.
Adjusting for this one-time gain, M&M’s net profit is down 33 per cent year-on-year (y-o-y) at Rs 667 crore. Bharat Gianani of Angel Broking says M&M’s December quarter numbers were in line with estimates both on the top line as well as on the profitability front, after adjusting for the exceptional gain of Rs 299 crore.
While tractor volumes fell 24 per cent y-o-y and automobile segment declined 11 per cent y-o-y in the December quarter, revenues fell 10 per cent to Rs 9,260 crore. Compared to the September quarter, M&M’s revenues grew one per cent thanks to higher realisations during the quarter. The company's consolidated operating margin during the quarter averaged at 11.7 per cent, down 330 basis points (bps) y-o-y owing to sluggish volumes. The stock surged on Friday, as analysts believe volumes are likely to recover in the auto and tractor segments.
The company has been losing market share in the utility vehicles segment, as it lacks a petrol variant in its portfolio. However, the company is planning to launch a slew of products in the next few months, which would help revive volumes. Utility vehicles account for 80 per cent of auto segment’s sales. The company’s market share has been dropping but is likely to improve in the coming quarters, claim analysts.
Adjusting for this one-time gain, M&M’s net profit is down 33 per cent year-on-year (y-o-y) at Rs 667 crore. Bharat Gianani of Angel Broking says M&M’s December quarter numbers were in line with estimates both on the top line as well as on the profitability front, after adjusting for the exceptional gain of Rs 299 crore.
While tractor volumes fell 24 per cent y-o-y and automobile segment declined 11 per cent y-o-y in the December quarter, revenues fell 10 per cent to Rs 9,260 crore. Compared to the September quarter, M&M’s revenues grew one per cent thanks to higher realisations during the quarter. The company's consolidated operating margin during the quarter averaged at 11.7 per cent, down 330 basis points (bps) y-o-y owing to sluggish volumes. The stock surged on Friday, as analysts believe volumes are likely to recover in the auto and tractor segments.
The company has been losing market share in the utility vehicles segment, as it lacks a petrol variant in its portfolio. However, the company is planning to launch a slew of products in the next few months, which would help revive volumes. Utility vehicles account for 80 per cent of auto segment’s sales. The company’s market share has been dropping but is likely to improve in the coming quarters, claim analysts.