Mahindra and Mahindra Ltd, the tractor and utility vehicle maker, is expected to achieve a 33% rise in its profit after tax for the fourth quarter ending 31 March, on the back of rising dividend from subsidiary companies such as Mahindra and Mahindra Financial Services Ltd and Tech Mahindra Ltd, say analysts. Mint spoke to five auto analysts on Friday ahead of the auto major’s earnings announcement on Monday and all figures are averages of their estimates.
Analysts estimate the profit after tax for the quarter ending 31 March 2007 to be around Rs232 crore as compared to a profit after tax of Rs174.6 crore after adjusting for an exceptional income of Rs146.5 crore (net of tax) in the corresponding quarter of the previous year.
The analysts estimated net sales of the company for the quarter at Rs2288.83 crore, 19% higher than revenues for the same quarter in 2005-06.
“The growth in the profit will come largely on account of rising dividend (payments) from the subsidiary companies,” said an analyst at a foreign brokerage firm who did not wish to be identified.
The analysts also estimate the operating profit of the company for the quarter at Rs328.4 crore, a 14.8% increase over fourth-quarter operating profit in 2005-06.
Sales in India’s auto industry started flagging in March after the central bank raised interest rates and tightened money supply in an effort to control inflation. Analysts expect that trend to continue in 2007-08.
Tractors account for around 65% to M&M’s total revenue. The company sold 23,476 tractors in the fourth quarter, a 8.5% growth over the same period of the previous year. However, sales of tractors declined in April 2007.
“We expect 10% growth in the demand of tractors this year against 20% growth last year,” said Umesh Karne, senior research analyst, Emkay Share and Stock Brokers.