M&M net profit slips 6%; CEO says firm will deliver scale in FY25

PAT excluding last yr's one-off gains rises 20%

The country’s fourth-largest auto maker and farm vehicles leader Mahindra and Mahindra (M&M) on Wednesday reported a 6 per cent year-on-year (Y-o-Y) drop in net profit for the first quarter of the 2024-25 (Q1FY25). Profit after tax (PAT) for Q1FY25 came in at Rs 3,208 crore.

M&M said the reported PAT drop was on account of two one-off gains last year amounting to Rs 763 crore. Out of this, Rs 405 crore gain was from its KG Mobility investment at the time of listing of the stock, and also a Rs 358 crore gain on sale of its stake in Mahindra CIE (MCIE).

However, PAT excluding exceptional items, including previous year gains from KG Mobility and stake sale in MCIE grew by 20 per cent.

Revenues for the quarter grew by 10 per cent to Rs 37218 crore on strong growth in auto and farm verticals. Bloomberg analyst estimates had pegged the revenue growth at 18 per cent and adjusted net income growth at 7 per cent or so.

The stock was down marginally at the end of day’s trade on BSE.

Anish Shah, managing director & CEO, M&M said, “We have started the FY25 fiscal year with strong operating performance across all our businesses. Capitalising on leadership positions, Auto and Farm continued to expand market share and profit margins.”

Shah added that transformation at M&M Financial Services is yielding results as asset quality improves and transformation at Tech Mahindra has commenced with margins as a key focus. “With this momentum and relentless drive towards execution, we will continue to ‘deliver scale’ in F25,” Shah said.

The auto division posted the highest ever Q1 volumes at 212,000 units, up 14 per cent. Auto revenues came in at Rs 19,776 crore, up 16 per cent, while PAT was up 35 per cent (excluding KG Mobility gains) to Rs 1,330 crore. 

Volkswagen JV

Amid news reports claiming that Volkswagen is in talks with M&M to form a joint venture, Shah said the firm will only look at it if they find a solid reason. Shah said, “If there are solid reasons to do a partnership that benefits us, then we will look at it.” International media reports had claimed that Volkswagen was looking to sell stake in the Indian arm.

The company said it was on track to expand its SUV production capacity from 49,000 per month (at the end of FY24) to 64,000 per month at the end of FY25.

SUV revenue market share was up 130 bps in Q1FY25 to 21.6 per cent.

In the farm segment, the domestic industry outlook is improving, M&M felt, which managed to grow market share by 180 bps to 44.7 per cent in Q1FY25.

The farm division posted highest ever quarterly volumes at 120,000 units, up 5 per cent. Farm machinery revenue was up 34 per cent to Rs 265 crore. Farm division revenues were flat at Rs 9711 crore while the PAT was up 4 per cent to Rs 1238 crore.

Rajesh Jejurikar, executive director & CEO (Auto and Farm Sector), M&M said, “In Q1F25, we gained market share in both Auto & Farm businesses. We achieved highest ever quarterly tractor volumes and also improved our Core Tractors PBIT margin by 110 bps YoY.”

He added that M&M retained market leadership in SUVs with 21.6 per cent revenue market share and in LCVs under 3.5 tonne, it crossed 50.9 per cent volume market share.

“Auto Standalone PBIT grew by 39% with margin improvement of 180 bps Y-o-Y,” Jejurikar said.

As such for the full year, M&M feels tractor sales would grow by about 5 per cent or so. For LCVs it would be a slightly difficult year, but Jejurikar felt that the segment may see growth in the second half of the year.

The positive sentiment stems from the fact that price realisation in mandis remain favourable for farmers coupled with a positive monsoon outlook, and government spending on the rural sector.

Navratra starting in H2FY25 will give further impetus.

Apart from auto and farm, asset under management of MMFSL was up 23 per cent during the quarter, and PAT up 37 per cent; Tech Mahindra PAT was up 23 per cent; Mahindra Lifespaces residential pre-sales was up 3-times to Rs 1019 crore; Club Mahindra’s total income grew 8 per cent to Rs 384 crore as it crossed a cumulative member base of 300,000; Mahindra Logistics revenue was up 10 percent to Rs 1,420 crore.