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May 31, 2013, 09.39 AM IST | Source: Moneycontrol.com

M&M beats street in Q4; to invest Rs 10,000cr in 3 yrs

Analysts on average had expected M&M to report a net profit of Rs 723 crore on revenue of Rs 9,990 crore, according to a CNBC-TV18 poll.

Nachiket Kelkar
Moneycontrol,com

Utility vehicle maker Mahindra & Mahindra reported a better-than-expected fourth quarter net profit of Rs 889 crore, up near 2 percent year-on-year, helped by sales growth, which was also ahead of street expectations and exceptional gain from sale of Mahindra Holidays and Resorts shares.

The company's net sales in the quarter rose 12 percent from a year ago to Rs 10,353 crore in Jan-March.

Analysts on average had expected M&M to report a net profit of Rs 723 crore on revenue of Rs 9,990 crore, according to a CNBC-TV18 poll.

Its operating margin came in at 12.1 percent in Jan-March.

The company sold 34 lakh shares of Mahindra Holidays in the quarter, which resulted in an exceptional gain of Rs 91 crore. In the year ago quarter, it had exceptional gain of Rs 256 crore from merger of arm Mahindra Automotive Distributors. This included a tax saving of Rs 148.5 crore.

Excluding the exceptional items, profit was up 29 percent, the company said.

Its finance costs also declined to Rs 51 crore from Rs 71 crore a year ago.

CAPEX PLANS

M&M plans to invest Rs 10,000 crore over 2013-15. This will include a capex of Rs 7,500 crore for capacity expansion and new product launches and Rs 2,500 crore as investment in group firms like Mahindra Retail, Mahindra Reva, Mahindra two-wheelers and Ssangyong, Pawan Goenka, president, automotive and farm equipment sector, said.

The company will launch 3-4 variants this year, but new products and platforms will come only in FY15, he said.

OUTLOOK

M&M says last year was a challenging year, especially for the tractor industry, but things are now looking upbeat.

Tractor sales have been better over April-May, compared to last year, so there is a hope of a better year ahead, Goenka said.

UV sales have been better than passenger car sales over last year. But the additional 3 percent excise duty announced on UVs in the Budget is hurting the industry, he said.

UVs that dont fall under the additional tax burden (sub 4 metre UVs for instance) have seen 100 percent growth, but sales of UVs where the additional excise was passed on to customers (XUV500 for instance), sales have fallen, Goenka said.

The company is looking at various short term measures to minimize the impact of the excise hike.

Also Read: Tata Motors: What analysts make of Q4 performance

READ MORE ON  Mahindra & Mahindra, XUV500
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