Mumbai: Utility vehicle and farm equipment maker Mahindra and Mahindra Ltd (M&M) on Tuesday reported a 70.33% jump in standalone net profit for the quarter ended March, benefiting from a broader rural recovery which resulted in higher tractor and auto sales.

Profit rose to Rs1,059.09 crore from Rs621.78 crore a year earlier, while net sales at maker of the Scorpio and XUV5OO, increased 10.47% to Rs13,307.88 crore from Rs12,047.58 crore in the year-ago quarter.

The revenue figures are not comparable to the year-ago owing to the accounting treatment of excise duty under the goods and service tax regime, which was implemented from 1 July, the company said.

M&M had been expected to post a standalone net profit of Rs1,049.1 crore on net sales of Rs13,112.06 crore, according to a Bloomberg poll of 16 analysts.

Managing director Pawan Goenka claimed the company’s automotive sector posted the fastest growth in 21 quarters, while tractors posted the highest growth in 31 quarters, at a press conference on Tuesday.

Revenues from the automotive sector, which accounts for every two out of three rupees M&M earns, rose a marginal 2.6% to Rs9,135.89 crore. The farm equipment segment, which nearly makes up the balance, led revenue growth with a 33.01% jump to Rs3,716.07 crore. Revenues from other segments, such as hospitality and financial services, rose 30.6% to Rs554.26crore, thus making up about 6% of total revenue.

The Ebitda (earnings before interest, tax, depreciation and amortization) margin, a key measure of operating profitability, at the consolidated level rose 3.p percentage points to 15.1% from 11.2% a year ago.

The margins were aided by a richer product mix, cost optimization and price hikes, said senior executives at the firm.

The margins were about 200 points ahead of estimates, according to Priya Ranjan, vice-president at Systematix Institutional Equities, a Mumbai-based brokerage house.

Domestic sales were led by tractors, with a 43.6% jump during the quarter to 66,885 units from 46,583 units a year ago, as overall rural and sentiment improved, in addition to two years of consecutively normal monsoons, said managing director Pawan Goenka.

Total domestic sales in the automotive sector rose 6.4% to 89,568 units from a year ago, on the back of a broader rural recovery, in addition to easy availability of affordable finance.

Within the automotive segment, the company posted an 8.4% increase in UV sales to 67,805 units although its market share has been on a steady decline since fiscal 2013. During the fiscal gone by, the maker of the Bolero lost its pole position in the segment to Maruti Suzuki India Ltd, the first time it has closed a financial year in the second position.

Going forward, the Mumbai-based auto conglomerate plans to cement its position in the industry this fiscal with the launch of three new UVs, an intermediate commercial vehicle range, more electric vehicles, and an expansion in dealerships and capacity, said Rajan Wadhera, president of the automotive division at the firm.

Goenka is “cautiously optimistic" about the industry’s performance this fiscal on the back of a relatively positive economic environment, continuing government support to infrastructure and the rural economy, and expectations of a normal monsoon, though rising crude oil and commodity prices may play spoilsport.

He expects “the momentum of FY18 to continue into this fiscal" with tractors, passenger and commercial vehicles posting growth upwards of 10%.

Mahindra’s farm equipment division, headed by Rajesh Jejurikar, is looking to focus on the farm machinery and implements business, which Jejurikar sees as “a very big opportunity over the next three years as mechanization levels in farms rise".

Analysts have a positive outlook on the company given its heavy rural reliance buoyed by expectations of a normal monsoon, in addition to three new UV launches during the fiscal.

“All the key segments for Mahindra are doing well, including the auto division, but there is still room for improvement there", said Priya Ranjan of Systematix Institutional Equities.

The segment will be helped by new launches, but the compact SUV (codenamed S201) may not be a game changer because it is already a crowded segment, he added.

Mahindra and Mahindra shares closed at Rs868.8 apiece on the BSE, up 2.26%, while the benchmark Sensex closed at 34,949.24 points, posting a loss of 0.61%. The results were announced during market hours.