Mahindra & Mahindra Ltd (M&M) is likely to report a year on year growth of about six times or 520 percent in standalone profit after tax to Rs 1,000 crore for the quarter ended March today. Sequentially, PAT is seen declining 25 percent due to higher cost of raw materials and other expenses as well as lower other income.
Revenue for the Mumbai based automaker is expected to grow 26 percent on year to Rs 16,880 crore aided by increase in volumes, higher realisations and improved product mix in favour of better priced sports utility vehicles (SUV).
The company had reported a standalone PAT of Rs 162.5 crore during the corresponding period in the previous financial year while achieving a revenue of Rs 13,338 crore. PAT was impacted by an exceptional expense item of Rs 840 crore without which it would have been Rs 1,002 crore.
During the October-December 2021 period, the company had recorded a standalone PAT of Rs 1,353 crore and registered a revenue of Rs 15,239 crore.
Volume and realisation
Experts expect improved wholesales for SUVs and pickups with easing of supply chain constraints but tractor demand is likely to remain subdued due to down-cycle. Tractor sales declined 22 percent while auto sales grew 44 percent year on year.
Average selling price in auto segment likely improved 12 percent due to improved mix as the company is selling more higher priced SUV models.
“We estimate a 28 percent year on year increase in revenues aided by 58 percent increase in automotive revenues, led by 44 percent increase in volumes, while tractor segment revenues are likely to decline 16 percent, led by 22 percent decline in volumes,” a report from Kotak Institutional Research said.
Margin
EBITDA (earnings before interest, tax, depreciation and amortisation) margins are likely to be hit by commodity inflation and decline in higher margin tractor business.
“Decline in high margin tractor segment (volume down 22 percent quarter on quarter) and raw material cost pressure are expected to result in EBITDA margin contraction of 84 basis points quarter on quarter while auto margin is likely to remain flat despite strong volumes due to commodity inflation,” a report from ICICI Securities said.
Experts expect EBITDA margins of 10-11 percent for the quarter as compared to 14.7 percent a year ago and 11.9 percent during the previous quarter.
“We estimate overall EBITDA margin to decline 100 basis points quarter on quarter led by an inferior segmental mix (automotive volume mix stood at 68.1 percent versus 56.6 percent in the previous quarter) partly offset by improvement in automotive segment EBIT margin due to operating leverage benefits and a richer model mix,” the report from Kotak Institutional Research said.
Key monitorables from the management commentary would be growth outlook for the tractor segment and update on capital allocation.
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