Prakash Diwan of Altamount Capital Management said the second quarter numbers look good mainly because in the previous quarter the auto segment was weak. The concern is that the company has not yet been able to launch anything on the diesel side.
Mahindra and Mahindra today reported a 27 percent jump in its standalone net profit to Rs 1,163.27 crore for the second quarter ended September 30, 2016. The net profit for the combined entity M&M and Mahindra Vehicle Manufacturers Limited (MVML) came in at Rs 1.253 crore compared to CNBC-TV18 poll of Rs 1070 crore and Revenues were flat at around Rs 10,172 crore compared to the poll of Rs 10,277 crore.
However, the combined entity managed to better its EBITDA performance by clocking Rs 1,468.2 crore versus CNBC-TV18 poll of Rs 1,387 crore and EBITDA margins came in slightly better at 14 percent compared to the estimate of 13.5 percent.
Dissecting the numbers Ashwin Patil of LKP Securities said the numbers are definitely in line with expectations. The auto segment has shown an improvement but no major surprises.
The stock has corrected a lot over the past few days and so, from current levels with expectations of better growth on most fronts especially on back of and better Rabi season, good monsoon, new launches, one can buy the stock, said Patil.
Domestic tractor sales during the second quarter were at 57,863 units, up 36.9 percent from the same period last fiscal, the company said.
Prakash Diwan of Altamount Capital Management said the second quarter numbers look good mainly because in the previous quarter the auto segment was weak. The concern is that the company has not yet been able to launch anything on the diesel side. So nothing exciting happening and also during UP elections now buying of the Boleros and SUVs will not happen because of the demonetization and could impact sales hugely in the next 6 months.
So, all the numbers will have to be reworked. However, farm equipment business could do well but cannot rely too much on that.
There haven’t been new launches from the M&M stable post the KUV but the company will come out with new launches in Q3, Q4 and 2018 to gain back the market share.
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