 "M&M Q3 net dips 14% to Rs 808 cr")
The Mumbai-based company posted Rs 808 crore net profit during the reporting quarter as compared to Rs 942 crore posted in the same quarter a year ago. A Bloomberg polled consensus of analysts was expecting the net profit to be at Rs 913.80 crore.
Net profit during these two quarters are not strictly comparable as last year same quarter the company had recorded gains of Rs 300 crore on account of sale of stake in Mahindra Engineering Services.
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Despite rise in revenue on the back of strong demand for new utility vehicles and slight uptick in tractor volumes during the quarter, realisations came under pressure indicating pricing pressure at the retail level especially in tractors.
With a market share of 42.2% in tractors the industry will close the year with a fall of 10% to around 500,00 tractors as against 550,000 tractors sold during last financial year. The fall in volumes during the first nine months of the year was 13.5%.
Automotive volumes, including UVs grew to 130,888 units, an increase of 15.4% as against 113,400 units sold in the same period last year. Volumes from the farm equipment sector grew by 4.9% to 62,764 units as compared to 59,856 units.
Mihir Jhaveri, director – institutional research, Religare Capital Markets, said: “M&M Q2 profit after tax came in below estimates on lower margins. Standalone EBITDA margin was below expectations at 11.3%”.
Total expenses grew 16% to Rs 10,061 crore during the quarter as compared to Rs 8,667 crore posted during the same quarter a year ago.
V S Parthasarthy, chief financial officer, M&M said, “Commodity prices have been bening and we are seeing some green shoots in auto. Tractor demand however remains an area of concern. But overall the deceleration has slowed down”.
Net standalone sales grew to Rs 10,900 crore, an increase of 17% as compared to Rs 9,310 crore posted in the same quarter a year earlier. This was slightly lower than the Bloomberg estimate of Rs Rs 10,958.30 crore.
In a separate development M&M will transfer its agri business to Mahindra Shublabh Services, a 100% subsidiary of M&M. This business includes crop care, seeds, seed potato to name a few and clocks quarterly revenue of Rs 220-250 crore according to the company.
Pawan Goenka, executive director, M&M said, “Our agri business has reached a critical mass now and this new entity would provide an opportunity to leverage the potential that these business offer and thus function an as end-to-end provider in the agri value chain. The agri business has grown 12 times in the last five years and is just about break even business for us”.
The company has witnessed bookings of 18,000 units for the newly launched KUV100 last month. “We are presently taking bookings of 350-400 units of the KUV100 every day even as production stands at 200 units a day. We plan to take production to 300 units a day by August," added Goenka.