Earnings before interest, taxes, depreciation, and amortization (Ebitda), too, grew 62 per cent year-on-year (YoY) to Rs 290 crore, whereas Ebitda margin came in at 13 per cent (up 270bp YoY/60bp QoQ). Net sales, on the other hand, rose 34.6 per cent YoY at Rs 2,247 crore.
The company said that the overall positive performance was supported by growth and solid profitability in India. Besides, big commercial efforts in Europe helped offset huge cost increases (Inflation, Energy, transport).
That apart, India business operations continues to remain strong, they said, on the back of strong demand from PVs/MHCVs. However, the demand for two-wheelers remains tepid, while tractors grew on a high base.
The company’s Ebitda margin was negatively affected by raw material price increase, passed through without margin, and big energy and inflation impact: partially passed through with some delay.
Mahindra CIE posted a healthy set of numbers for Q4CY22. Excluding German forging business, the European operations reported Ebitda margins of 14.5 per cent in Q4CY22, up 100 basis points (bps) quarter-on-quarter (QoQ).
That said, the company made tangible progress in diversifying its topline base with the introduction of EV specific components and now also counts Ola Electric as one of its top clients.
The company also generated healthy CFO (Rs 1,118 crore) as well as FCF (Rs 615 crore) for CY22, said analysts.
"The Q4CY22 was the first quarter without Mahindra Forgings Europe AG (MFE) Germany, however, Mahindra CIE’s overall performance in the quarter was in line with our estimates. The domestic business outperformed the European business, driven by strong domestic demand, while European demand showed signs of improvement, on the back of cost pass through and easing chip shortages," analysts at Motilal Oswal Financial Services (MOFSL) said.
Given the moderation in commodity costs and partial pass-through of energy costs, the brokerage firm expects margins in both geographies to improve from here on.
"The company’s growth story is on track, driven by its organic initiatives (new products and customers in the India business). This, coupled with cost-cutting measures in both India and the EU, is expected to drive margin expansion going forward. Any significant order wins or growth in the EV portfolio can drive a re-rating on the stock," the brokerage firm added.
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