Automobile and tractor company Mahindra & Mahindra (including Mahindra Vehicle Manufacturers) on February 5 reported a massive 39.6 percent year-on-year growth in profit at Rs 530 crore for the quarter ended December 2020.
The company had an exceptional loss of Rs 1,213.98 crore for the December quarter, representing impairment provisions for certain long-term assets and other exposures. The profit before exceptional loss stood at Rs 1,745 crore for the quarter.
Revenue from operations grew by 16 percent year-on-year to Rs 14,056.5 crore in Q3FY21, with strong tractor volumes.
The company sold 97,420 tractors in the domestic market in Q3FY21, registering a 20 percent growth over the corresponding period on robust rural story but automotive business sales fell 7 percent to 1,15,272 vehicles as some significant challenges do exist, especially on the supply side and commodity prices, M&M said.
Numbers were better than analysts' expectations. Profit (before exceptional loss) estimated at Rs 1,538 crore on revenue of Rs 13,754 crore for December quarter 2020, according to the average of estimates of analysts polled by CNBC-TV18.
At the operating level, its earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 33.4 percent to Rs 2,385.6 crore and margin expanded 220 bps to 17 percent compared to the corresponding quarter, driven by cost optimisation and operating leverage, which both were also above CNBC-TV18 poll estimates of Rs 2,263 crore and 16.4 percent respectively.
Revenue from its automotive business grew by 12 percent year-on-year to Rs 8,311 crore with its EBIT rising 13.4 percent and margin expanding 10 bps YoY, for the quarter ended December 2020.
Tractor business registered a 23.5 percent year-on-year growth in revenue at Rs 5,281 crore with its EBIT climbing 49 percent and margin rising 390 bps YoY.
"Growth momentum for the tractor industry was supported by positive sentiment in rural parts of the country, specifically the agri economy which is driven by (i) Very good monsoon (ii) Healthy reservoir levels (iii) record kharif production (iv) good rabi sowing (v) Continued high central government spending in agriculture and rural development," said the company.
On the back of these positive factors, it is expected that tractor demand will remain robust during the coming quarter as well, it said.
Mahindra & Mahindra shares were trading at Rs 874.30 on the BSE, up 0.90 percent.