Mumbai: Mahindra and Mahindra Ltd (M&M) on Monday said net profit in the March quarter rose 6% from a year ago on strong sports utility vehicle (SUV) sales, but fell short of market expectations.
Net profit at India’s largest utility vehicle and tractor maker stood at Rs.583.73 crore, against Rs.550.56 crore last year.
Net sales also increased 14.8% to Rs.10,666.43 crore from Rs.9.288.88 crore last year.
A Bloomberg poll of 20 brokers had forecast a net profit of Rs.681.30 crore, and a poll of 21 brokers had estimated net sales of Rs.10,429.7 crore.
During the fourth quarter, the company’s revenue from the automotive sector rose to Rs.8,058.45 crore as against Rs.6,916.37 crore last year, while farm equipment revenue advanced to Rs.2,742.66 crore against Rs.2,518.70 crore.
Unit sales at the company’s farm equipment business rose 12% to 43,415 units in the quarter, while sales at the automotive business rose 14.1% to 140,509 units over the same period a year ago.
“We expect fiscal 2016-17 to be better,” said Pawan Goenka, executive director at Mahindra and Mahindra, adding that the company expects to benefit from the 14 new models launched in 2015-16 during the current year.
The forecast of an above-normal monsoon is expected to improve the performance of the farm equipment sector, he added.
“We have posted a double-digit growth in both farm equipment and auto business after a gap of 16 quarters,” said V.S. Parthasarathy, group chief financial officer at Mahindra and Mahindra.
The strong growth in the automotive business came on back of a 21% increase in utility vehicle sales, driven by new model launches, including the KUV100, a compact SUV.
For the financial year ended 31 March, the company posted a consolidated net profit of Rs.3,211.26 crore, up 2.35% compared to Rs.3,137.47 in 2014-15.
Net sales rose 10.14% to Rs.69,785.97 crore as against Rs.63,361.96 crore in 2014-15.
“The growth in revenue was 8% ahead of our estimates,” said Nitesh Sharma, an analyst at PhillipCapital India Ltd.
Stronger-than-expected revenue growth was largely led by higher realizations in the farm equipment segment, Sharma added.
Margins at the group level, which included the margins of Vehicle Manufacturers Ltd, slipped 101 basis points (just over 1%) quarter-on-quarter in the January-March period to 12.5%.
This was largely because the excise duty benefits that the company’s plant in Pantnagar, Uttarakhand, was eligible for, expired during the quarter.
The company’s board, which met on Monday, recommended a dividend of Rs.12 per share of the face value of Rs.5 each. It also approved an enabling resolution to raise funds by issuing debt securities on private placement basis for an aggregate amount not exceeding Rs.5,000 crore.
M&M shares closed 0.57% lower at Rs.1,327.50 on Monday on the BSE, while the benchmark index Sensex gained 0.27% to close at 26,725.60 points.