Mahindra & Mahindra Q4 net seen at Rs 723cr; sales up 7%

Moneycontrol Bureau

India's largest utility vehicle maker Mahindra & Mahindra reports fourth quarter and FY13 results later on Thursday. The results come amid what has been a good year for UV makers, as sales although moderating have remained much stronger than compared with passenger cars. Analysts on average expect M&M to report a net profit of Rs 723 crore in Jan-March, compared with Rs 875 crore in the year ago quarter, according to a CNBC-TV18 poll. It must be noted that the company had a tax saving of Rs 149 crore arising from the carried forward unabsorbed past losses and deferred tax positions of Mahindra Automotive Distributors Ltd, which was merged. Its revenue is seen up 7 percent year-on-year to Rs 9,990 crore in Jan-March. EBITDA (earnings before interest, taxes, depreciation and amortization) is expected to rise 15 percent to Rs 1,109 crore, while operating profit margins are seen at 11.1 percent, versus 10.3 percent in the year ago quarter, the poll states. Margins will decline on a quarter-on-quarter basis due to lower tractor volumes and higher discounting and ad spends amid weak demand, says brokerage Motilal Oswal. Expect M&M's volumes to have grown 7 percent in the quarter, driven by utility vehicles, while tractor sales have been subdued. "Realisations could remain flat QoQ as higher proportion of automobiles gets offset with lower proportion of tractor sales," says HDFC Securities. Even among UVs, heightened competition (Maruti Suzuki Ertiga, Renault Duster among others), 3 percent additional excise duty on SUVs announced in the Union Budget and a gradual rise in diesel prices, has moderated volume growth to 22 percent in Q4, from average of 35 percent in Q1 and Q2. M&M's automotive sales rose 12 percent YoY 1.45 lakh units in the fourth quarter. Within the automotive segment, UV sales surged near 23 percent to 71,787 units, according to CNBC-TV18. Tractor sales fell 5 percent to 49,664 units. ICICI Direct.com feels tractor volumes would have bottomed out. THINGS TO WATCH -- Volume growth in the automotive as well as the tractor segment
-- Outlook for FY14
-- Current sales trends
-- New luanches planned in FY14
-- Business update on its Korean arm Ssangyong
-- Update on the UV portfolio. The company has said it will look at tweaking its product portfolio following the hike in excise. STOCK WATCH M&M shares were up 1.7 percent at Rs 977 in morning trade on NSE. As of Wednesday's close, the stock is up a little over 3 percent since Dec-end, nearly in line with the broader Nifty, which is up 3.4 percent. Many analysts still are bullish on M&M. Macquarie, for instance, expects the stock to "outperform," but says, overall economic slowdown, diesel price rise to correct the past anomaly, the additional excise duty on UVs and rising competition in the UV segment are key risks.