Mahindra and Mahindra, one of India's leading automobile companies, is expected to report muted Q4 financial results as the farm equipment business drags the overall revenue and profitability.
The company's fiscal fourth quarter net profit is expected to rise to Rs 2,026 crore, up a mere 2.5 percent from the year-ago period, according to a Moneycontrol poll of six brokerage estimates. Revenue from operations is expected to rise just over 7 percent to Rs 24,182 crore from the same period last year. M&M will declare its result on May 16.
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"Revenue growth on-year will be supported by robust performance in the automobile segment. However, the key thing to watch out for is auto production and tractor demand outlook," Nuvama Institutional Equities said in a note.
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M&M’s January-March EBITDA is expected to climb to Rs 3,067 crore, higher by nearly 10 percent from the corresponding period previous year.
The Thar-maker is expected to experience a modest 2.9 percent increase in volume this quarter, selling 286,924 units. The limited growth in the automobile business is also expected to be affected by the underperformance of the farm equipment business. Total tractor sales slipped to 71,644 during the Q4, down 20 percent from the year-ago period, and down 30 percent from the previous quarter.
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HDFC Securities said that for the fourth quarter, SUVs continued to outperform the Passenger Vehicle (PV). While Maruti led with a 72 percent year-over-year growth, M&M reported a 28 percent year-over-year growth. However, it is anticipated that growth will slow in FY25 due to a high base effect and a lack of exciting new launches from listed players.
In a report, BNP Paribas said M&M continues to experience strong demand for its new SUV models, with monthly bookings surpassing both its sales and target capacity of 49,000 units by the end of Q4 FY24. Recent model launches have significantly bolstered its brand identity in the SUV market. It added that there is also significant potential for value creation should M&M’s board decide to list the auto and farm businesses separately.
In April, the company reported a 13 percent increase in sales at 70,471 vehicles. In the Utility Vehicles segment, Mahindra sold 41,008 vehicles in the domestic markets, a growth of 18 percent. As for the farm equipment business, the company reported that domestic sales in April 2024 came in at 35,805 units, as against 35,398 units during April 2023.
At about 12 noon on May 15, a day ahead of the results, shares of the company were trading at Rs 2,296, up over a percent. Mahindra and Mahindra shares have rallied 27 percent in the last three months.
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