M&M Q3 net down higher-than-expected 10% at Rs 662 cr

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M&M Q3 net down higher-than-expected 10% at Rs 662 cr

Utility vehicle maker Mahindra & Mahindra reported a higher-than-expected 10% decline in third quarter net profit at Rs 662 crore, which disappointed the street, sending its stock down more than 2% in afternoon trade.

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Utility vehicle maker Mahindra & Mahindra reported a higher-than-expected 10% decline in third quarter net profit at Rs 662 crore, which disappointed the street, sending its stock down more than 2% in afternoon trade.

In the year-ago quarter M&M had exceptional gains of Rs 118 crore from the sale of its holdings in Owens Corning India. Excluding the one-time gains, M&M's profit was up 7.3% from a year ago.

The maker of Bolero and Scorpio SUV and Yuvraj tractor reported net sales of Rs 8,387 crore, up 36% year-on-year in the October-December quarter.

Analysts on average had expected M&M to report a net profit of Rs 691 crore, on revenue of Rs 8,000 crore, according to a CNBC-TV18 poll.

The company's operating margin at 12.2% was also lower than analysts expectation of 12.6% in the third quarter. It had margin of 15.1% in the year ago quarter. M&M expects its margins will remain under pressure in the near-future.

A key reason for the margin pressure in the last quarter was "relentless" increase in material costs. Its raw material costs during the quarter rose 21% year-on-year to Rs 4,579.22 crore.

Utility vehicles as well as tractors, meanwhile, saw "good" volume growth in the third quarter, M&M said. Sales of passenger utility vehicles, for instance, rose 23% from a year ago to 51,702 units and it has now a market share of 57.8%.

The company also sold 62,342 tractors under the Mahindra and Swaraj brands, up 12% from a year ago. M&M has a market share of 43% among tractors.

Meanwhile, M&M said inflation, although still high, has started coming down and that has raised hopes of a decline in interest rates going ahead.

At 14:30 hrs, M&M shares were down 2.6% at Rs 691.75 on NSE.