Mahindra Q4 profit rises 19.9% to Rs725.16 crore
Mumbai: Mahindra and Mahindra (M&M) Ltd on Tuesday said profit rose 19.9% in the quarter ended March (fourth quarter) from a year earlier, beating street estimates. The firm’s earnings were boosted by strong tractor sales.
The auto maker’s net profit for the three months to March advanced to Rs725.16 crore from Rs604.63 crore a year ago. While revenue and other income rose 4.05% to Rs12,319.64 crore from Rs11,840.47 crore last year.
A Bloomberg poll of analysts had estimated standalone net profit of Rs605 crore and net sales of Rs10,573.2 crore.
During the quarter, the maker of Scorpio and XUV 5OO sports utility vehicles (SUV) sold a total of 137,770 units of automobiles including SUVs, small trucks and pick-ups—down 2% from a year ago.
The fall in sales in the company’s automotive sector was compensated by strong deliveries of tractors, whose sales rose 16% to 50,253 units (including exports) over the same period a year ago
Pawan Goenka, managing director at Mahindra & Mahindra said that with the entry of multiple brands in the UV segment, it is not possible for Mahindra to corner the more than 40% share it once enjoyed. However, he admitted the firm not happy with a 30% market share and hopes to recover some ground with new launches and refreshes this year.
“In another six months , we expect sales to do better,” said Goenka.
Meanwhile, the Mumbai-based firm—the only manufacturer of an electric car—plans to invest around Rs600 crore to Rs800 crore in EV technology as it seeks to take advantage of the government’s push for electric vehicles, he said.
The company’s revenue from the automotive sector in the three months to March rose to Rs7,612.77 crore from Rs7,476.72 crore a year ago, while farm equipment revenue advanced to Rs2,701.97 crore from Rs2,283 crore.
Net profit for M&M and Mahindra Manufacturing Vehicles Ltd (the manufacturing entity) rose to Rs874 crore from Rs691.51 crore a year ago. while revenue and other income ( earned from avenues other than its business operations) grew 5.2% to Rs12,289 crore.
“Higher other income and exceptional gains on sale of long term investments lead to profit beat,” said Bharat Gianani, analyst at Sharekhan
A lower volume in the automotive sector and transition from Bharat Stage III to Bharat Stage IV emission norms hit the firm’s margin, which fell to 11.7% from 10.7% a year earlier.
V. Parthasarathy, group chief financial officer at the firm, said M&M took a hit of Rs171 crore for the same. M&M has close to 13,000 unsold BS-III vehicles. While some of these will be exported, some others will be retrofitted with BS-IV engines to make them compliant with the stricter norms. He also attributed it expiry of fiscal incentives in Haridwar plant.
“Going ahead, revival of auto segment on new launches coupled with healthy growth in the tractor segment on back of a normal monsoon should lead to improvement in the earnings,” said Gianani.