Bumpy road ahead: Poor demand, higher costs may hit M&M's profitability

Despite the pressure on profitability, margins were ahead of Street estimates

Mahindra and Mahindra reported a muted performance in the March quarter, pegged back by declining volumes, lower realisations, and higher costs. 

Falling volumes, especially in the tractor segment, as well as sluggish growth in the auto business and pressure on pricing, led to revenue growth coming in at under 5 per cent. 

Margins were down 160 bps to 13.5 per cent, compared to the year-ago quarter, on account of higher product launch costs and lower realisations due to introductory prices. 

The sharp increase in commodity cost, which, as a percentage of revenue, was up 200 bps year-on-year during a time of falling volumes,