M&M Q4 Preview: Profit may decline despite up to 8% rise in revenue

The automaker may register 4-6 per cent decline Y-o-Y in its adjusted profits, falling in the range of Rs 1,808 crore to Rs 1,980 crore, according to brokerage estimates

M&M Q4 results preview: Mahinda and Mahindra (M&M) is scheduled to deliver its quarter four earnings of fiscal year 2023-24 (Q4FY24) on Thursday, May 16, 2024. The company is expected to post net sales in the range of Rs 24,406 crore to Rs 23,814 crore, an estimated jump of 6-8 per cent year on year. M&M reported a revenue of Rs 22,571 crore in Q4FY23. 

Analysts concur that the March quarter performance of the auto giant will be led by production ramp ups and new launches in the electric vehicle (EV) segment. 

The automaker may register 4-6 per cent decline Y-o-Y in its adjusted profit after tax (PAT), falling in the range of Rs 1,808 crore to Rs 1,980 crore, according to brokerage estimates. The company posted an adjusted PAT of Rs 1,935 crore in Q4FY23. 

 

Ahead of the Q4FY24 results announcement, M&M stock price hit a fresh record high of Rs 2,317 per share on Wednesday, May 15, 2024.

Here’s what key brokerages expect:

Kotak Institutional Equities:

We expect overall earnings before interest tax depreciation and amortisation (Ebitda) margin to decline by 100 bps Q-o-Q led by inferior segmental mix (tractorsegment volume mix stood at 25 per cent in 4QFY24 versus 32.5 per cent in 3QFY24), negative operating leverage and higher mix of farm implements (loss making business), partly offset by RM tailwinds.

We are building an automotive Ebit margin of 8.5 per cent in 4QFY24 versus 8.3 per cent in 3QFY24 led by a richer product mix and lower marketing spends. Also, we are building tractor segment Ebit margin to decline by 60 bps Q-o-Q to 14.9 per cent due to negative operating leverage.

Prabhudas Lilladher:

M&M is expected to benefit from its production ramp up which shall result in fulfilment of orders at a better pace. New launches in EV segment as well as refresher of the existing models. Better forecast of rainfall which shall aid in FES volume expansion.  

MM's revenue is expected to grow by 8.1 per cent YoY which will be largely driven by 13.8 per cent volume growth in automotive division and partially offset by decline in FES segment. 

Decline in tractor volume should offset RM cost benefit leading to flattish Ebitda margin. PAT may decline by 4.3 per cent YoY.

We revise our target price with a target price of Rs 2,306 with Rs 221 per share for its EV business.

ICICI Securities

This brokerage, too, expects revenue to rise around 6 per cent Y-o-Y to Rs 23,814.7 crore in Q4FY24, with Ebitda seen improving barely 3 per cent on year to Rs 2,876 crore. This would, however, be a 6 per cent and 11 per cent quarter-on-quarter decline in the respective parameters.

Profit, according to the brokerage, could be flat at Rs 2,078.5 crore, up 1 per cent Y-o-Y/down 15 per cent Q-o-Q. 

Nuvama Institutional Equities

It expects revenues, including those of MVML, to grow 8 per cent Y-o-Y/down 4 per cent Q-o-Q to Rs 24,396.9 crore, supported by robust performance in Auto segment. Ebitda margin, too, may expand on better margins in Auto segment. 

Consolidated profit (adjusted for MVML) merger, it said, could rise 13 per cent Y-o-Y/down 9 per cent Q-o-Q to Rs 2,230.4 crore. 

Key thing to watch out for is auto production and tractor demand outlook