Mumbai: Mahindra and Mahindra Ltd (M&M), the country’s biggest maker of sports utility vehicles, said fourth-quarter profit rose 35.5% from a year earlier boosted by a one-time gain and increase in sales of its Scorpio and Bolero models.
Net profit, including those of unit Mahindra Vehicle Manufacturers, rose to Rs 911.3 crore in the three months ended 31 March compared with Rs 672.4 crore in the year earlier, the company said in a statement on Wednesday. Net sales rose 33% to Rs 9,118.77 crore.
The company’s earnings were boosted by a one-time tax gain as M&M absorbed Mahindra Automotive Distributors Ltd.
Rising demand:A file photo of a M&M dealership in Mumbai.(Bloomberg
“The earnings are as per our estimates,” said Ronak Sarda, analyst at domestic brokerage MSFL Institutional Research. They have performed well despite weak tractor sales, he said.
Its material costs as a percentage of net sales widened to 72% in the fourth quarter compared with 69% in the year earlier. M&M’s standalone net profit also rose 44.2% to Rs 874.5 crore.
During the quarter, Mahindra sold a total of 63,509 passenger vehicles, up 27% compared with the 49,967 units sold a year earlier but M&M’s tractor sales for the period contracted 14% to 48,211 units from 56,293 units.
The company’s revenue from the farm equipment segment, which includes tractors, also shrunk 1.17% to Rs 2,761.09 crore. Farm equipment accounts for around 30% of the company’s revenue. Tractor sales in India, the world’s largest market for the farm vehicles, dropped 5% to 125,689 units in the first three months of 2012 from a year earlier, according to industry lobby Tractor Manufacturers Association, as high interest rates deterred buyers.
On Wednesday, shares of M&M gained 0.14% to end trading at Rs 657.20 on BSE, outperforming the exchange’s benchmark Sensex, which shed 0.77%.
The board of directors has recommended a dividend of Rs 12.50 per share for the full year compared with Rs 11.50 apiece in the preceding year. Mahindra expects vehicle sales growth in the domestic market to pick up in the second half of fiscal 2012-13.
Sarda, however, cautioned that the quarter ending June may not be as impressive for the company and rest of the auto makers as sales have been slowing on back of increased fuel prices and road tax, which have escalated the cost of ownership.
Meanwhile, consolidated net profit of the company for the year ended 31 March rose 1.5% to Rs 3,126.66 crore from a year earlier. The company said the sluggish profit at the consolidated level was because it included the earnings of its Korean unit Ssangyong Motor Co. Without Ssangyong, profit would be up 14.5%. Mahindra acquired the ailing Korean auto maker in March 2011.
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