M&M Q2 net may fall 13.4% at Rs 847cr: Motilal Oswal

Motilal Oswal has come out with its second quarter (July-September) earnings estimates for the automobile sector. The brokerage house expects Mahindra and Mahindra (M&M) to report a 6.9 percent fall quarter-on-quarter (down 13.4 percent Y-o-Y) in net profit at Rs 847 crore.

Sales of Mahindra and Mahindra are expected to decrease by 13 percent Q-o-Q (down 8.7 percent Y-o-Y) to Rs 8443 crore, according to Motilal Oswal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) are likely to fall by 24.9 percent Q-o-Q (down 17.8 percent Y-o-Y) to Rs 1052.3 crore.

Motilal Oswal's Report on Mahindra and Mahindra:

While M&M continues to face pressure on UV business led by correction in fuel price disparity and higher competitive pressures, growth in tractors has also moderated after strong 1Q. We expect auto business to report a decline of 15.4 percent, while tractor volumes are expected to grow by 9.8 percent.

Expect M&M to report revenue decline of 9.6 percent Y-o-Y (-13.8 percent Q-o-Q) due to sharp decline in auto volumes.

EBITDA margin (incl. MVML) to decline 200bp Q-o-Q (-140bp Y-o-Y) led by lower volumes, higher discounts (in autos) and lower share of high margin tractor volumes.

Adjusted PAT estimated at INR 8.4 billion (-14.5 percent Y-o-Y, -8 percent Q-o-Q).

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