M&M Q1 Preview: Analysts eye strong revenue growth; Ebitda to rise upto 23%

Most of the brokerages expect M&M's profit to fall up to 15 per cent in Q1FY25.

M&M Q1 Preview: Mumbai-headquartered automobile manufacturing company, Mahindra and Mahindra (M&M) is set to release its financial results for the June quarter of the fiscal year 2025 (Q1FY25) on Wednesday, July 31, 2023.

Analysts anticipate a strong auto demand momentum for the June quarter (Q1FY25), predicting a 13 per cent year-on-year (Y-o-Y) increase in revenue for the auto sector. Earnings before interest, tax, depreciation and amortisation (Ebitda) growth, analysts believe, is expected to exceed revenue growth, rising 17 per cent Y-o-Y due to improved scale and net pricing.

That apart, on the bourses, M&M’s stock was trading 0.77 per cent lower at Rs 2,912.40 per share at 10:06 AM. In comparison, BSE Sensex was trading flat at 81,368.67.

Meanwhile, here is what top brokerages expect from M&M Q1FY25 results:

Kotak Institutional Equities

Analysts at Kotak Institutional Equities predict a 14 per cent year-on-year (Y-o-Y) revenue increase for the quarter. This growth is expected to come from a 13 per cent Y-o-Y rise in tractor segment revenues, driven by a 6 per cent Y-o-Y increase in volumes, and a 15 per cent Y-o-Y boost in automotive segment revenues, supported by stronger average selling prices (ASPs), and a 1 per cent Y-o-Y increase in volumes due to the subsidiarisation of LML.

Kotak estimates a quarterly Ebitda margin improvement of 80 basis points, helped by a richer segmental mix, with the tractor segment's volume mix increasing from 27 per cent in Q4FY24 to 39 per cent in Q1FY25. 

Analysts project automotive Ebit margins to be 8.5 per cent in Q1FY25, down from 8.8 per cent in Q4FY24, due to higher marketing expenses. Tractor segment Ebit margins, meanwhile, are expected to rise 190 basis points quarter-on-quarter to 17.7 per cent. 

Considering these factors, Kotak forecasts a revenue of Rs 27,509.5 crore (up 14.4 per cent Y-o-Y), reported PAT of Rs 2,372.9 crore (down 14.5 per cent), Ebitda of Rs 3,777.6 crore (up 16.8 per cent), and an Ebitda margin of 13.7 per cent.

Motilal Oswal

The brokerage anticipates a 16.6 per cent Y-o-Y increase in revenue, reflecting a 13 per cent Y-o-Y growth in automotive volumes and a 6 per cent Y-o-Y rise in tractor volumes, leading to an overall volume growth of around 11 per cent Y-o-Y. 

Analysts expect a 40 basis point Y-o-Y gain in Ebitda margin due to a favourable mix, with the automotive division's profit before interest, tax (PBIT) margin forecasted to expand by 130 basis points Y-o-Y to 8.8 per cent. 

Therefore, Motilal Oswal expects M&M to report an adjusted PAT of Rs 2,980.6 crore (up 7.5 per cent Y-o-Y), Ebitda of Rs 3,900 crore (up 19.5 per cent), an Ebitda margin of 13.4 per cent, and revenue of Rs 28,100 crore (up 16.6 per cent).

Elara Capital

Those at Elara Capital project limited expansion in Ebitda margins due to rising raw material prices but expect improved margins quarter-on-quarter thanks to a better mix of tractors. 

That said, analysts predict a revenue of Rs 28,897.9 crore (up 20.1 per cent Y-o-Y), adjusted PAT of Rs 2,594.1 crore (down 6.5 per cent), and Ebitda of Rs 3,959 crore (up 22.4 per cent).

Nuvama Institutional Equities 

Nuvama analysts expect revenue growth driven by increased volumes in both automotive and farm sectors and better realisations. 

They anticipate an expansion in Ebitda margins due to improved margins in the auto segment and will be closely watching the tractor demand outlook.

Nuvama’s projections include a revenue of Rs 28,097.7 crore (up 17 per cent Y-o-Y), Ebitda of Rs 3,811.7 crore (up 18 per cent), and PAT of Rs 2,492.9 crore (down 10 per cent).