M&M beats street estimates with 29% jump in Q2 standalone profit

resr 5paisa Research Team 14th December 2022 - 11:59 pm
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Automobile major Mahindra & Mahindra (M&M) reported better-than-expected results for the three months ended September 30, with both revenue and net profit coming ahead of what brokerages had projected.

Standalone net profit before exceptional items grew 29% from a year earlier to Rs 1,687 crore for the second quarter. This exceeded expectations that ranged between Rs 1,100 crore and Rs 1,500 crore. Net profit after accounting for exceptional items grew almost nine-fold to Rs 1,432 crore.

Consolidated net profit before exceptional items grew 43% to Rs 1,975 crore. The profit after factoring in the exceptional items rose threefold.

Standalone revenue grew 15% to Rs 13,305 crore as against expectations of around Rs 12,500 crore. This was powered by the automotive unit as farm equipment revenue growth was modest.

The company’s share price rose 2.12% and was trading at Rs 877.5 apiece in late afternoon trade on the BSE in a weak Mumbai market on Tuesday.

M&M Q2: Other Highlights

1) Standalone EBITDA declined 19% to Rs 1,660 crore from Rs 2,057 crore in Q2 FY21.

2) Total vehicle volume was up 9% at 99,334 compared with a year earlier.

3) Total tractor volume was, however, lower at 88,920 versus 93,246 in the year-ago quarter.

4) Farm equipment sector tractor market share at 40.1%, up 1.9% from Q2 FY2021.

5) M&M operating margin 12.5% despite rising commodity prices and shortage of semiconductors.

6) Strong exports volumes: Farm up 105% (highest ever in H1); Auto up 86% compared to Q2 FY2021

M&M management commentary

Anish Shah, managing director and CEO at M&M, said the company saw significant improvement in its performance this quarter. “Our strong show in the auto and farm sectors was complemented well by the improved performance in the group companies. Our investments in digital platforms are doing well and present a meaningful opportunity to create and unlock value,” he said.

Rajesh Jejurikar, executive director at M&M, said the farm equipment sector continued to deliver robust performance, both in terms of market share and financial metrics despite steep commodity inflation.

“We had a blockbuster XUV7OO launch witnessing bookings of more than 70,000. demand for our other key automotive products also remains strong. With better availability of semiconductors, we hope to maintain the volume growth momentum Q3 onwards. We are poised well to deliver very strong growth and returns through an exciting new product portfolio,” Jejurikar said.

Manoj Bhat, group chief financial officer at M&M, said commodity prices impacted margins in both the auto and farm business. However, M&M’s focus on cost management and optimization helped mitigate some of the impact.

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