Car and tractor manufacturer Mahindra and Mahindra is expected to report a healthy rise in second-quarter earnings, led by robust automobile sales even as weak tractor sales will cap gains. The auto major will share its September quarter numbers on November 10.
Mahindra and Mahindra’s net profit is expected to jump over 37 percent on-year to Rs 2,844 crore, according to the average of estimates of five brokerages. Revenue is expected to grow 20 percent from a year ago to Rs 24,423 crore in the July-September period. The EBITDA margin may expand by 79 basis points, brokerage house Nomura has said.
Also read: Auto sector Q2 preview: Revenue, profitability to jump on high prices, margin boost
Auto segment strong for M&M, challenges in tractor segment
Most analysts tracking the company expect to see a rise in M&M’s auto sales volumes in the second quarter but a fall in tractor sales. Analysts at Kotak Securities expect the tractor segment revenue to remain flat against the year-ago period.
Also read: Q2 earnings, global trends, trading activity of foreign investors to drive market movement: Analysts
While M&M’s July-September EBITDA margin is expected to grow from the previous year, most brokerages expect it to fall sequentially.
A weaker segment mix (apart from auto) could result in a decline in M&M’s EBITDA margin from the previous quarter, Nomura said. Kotak Securities also predicts a fall in overall the EBITDA margin by 60 basis points quarter-on-quarter.
Kotak expects the auto segment EBIT margin to improve to 8 percent in Q2FY24 from 7.5 percent in the previous quarter but decline for the tractor segment by 10 basis points from the previous quarter due to negative operating leverage and higher mix of farm implement, partly offset by raw material tailwinds.
One basis point is one-hundredth of a percentage point.
At 2.57 pm, the stock was trading at Rs 1,546 on the National Stock Exchange, up 3.92 percent from the previous close. The share has fallen nearly 2 percent over the past month but is up 11 percent over the last year.
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