Mahindra Q1 net surges on takeover, utility sales1 min read . Updated: 30 Jul 2009, 05:03 PM IST
Mahindra Q1 net surges on takeover, utility sales
Mumbai: Mahindra & Mahindra Ltd posted a forecast-beating 152% rise in profit, boosted by its takeover of Punjab Tractors and strong sales of utility vehicles, but said a weak monsoon was a concern.
India’s top utility vehicles and tractor maker said there were signs in data and output of a return of consumer confidence. Its utility vehicles sales rose 28.5% during the quarter to 48,720 vehicles from a year earlier.
“The increase in profit is largely due to an improvement in operating margin by 450 basis points, possibly due to reduction in commodity prices," said Jatin Chawla, sector analyst at Indiainfoline.
He said the company’s raw material-to-sales ratio had gone down significantly during the quarter, although the company said volatility in commodity prices was concern.
Mahindra & Mahindra reported a net profit of Rs401 crore rupees, up 152% from Rs159 crore a year earlier.
Net sales rose to Rs4,229 crore from Rs3,287 crore year-ago.
A Reuters poll of 14 brokerages had estimated quarterly net profit at Rs302 crore on net sales of Rs4,052 crore.
Domestic tractor sales, including Swaraj tractors, rose 14% during the quarter to 42,130 units. Mahindra said its takeover of Punjab Tractors helped consolidate its position in the domestic tractor market and boost competitiveness.
Shares in Mahindra, valued at about $5 billion rose 1.2% to Rs852.05, their highest close since the start of 2008.
Its shares have more than tripled so far in 2009 to be best performing stock in the 30-share main index, which has risen nearly 60%.
Auto sales in India were hit hard in 2008 first by high interest rates and then a credit crunch and economic slowdown.
Car sales have picked up in 2009 as low interest rates and easier credit helps demand, while ability of credit, while categories such as medium and heavy truck are yet to recover.
Earlier this week, Tata Motors, India’s largest vehicles maker, reported an unexpected 58% rise in its June quarter net profit helped by lower costs and a change in accounting policy which saw lower foreign exchange-related losses.