Mahindra & Mahindra Q1 preview: Net profit expected to see double-digit growth

From left to right: Rajan Wadhera, President, Automotive Sector, Mahindra & Mahindra Ltd along with Mr Veejay Nakra, Chief of Sales & Marketing, Automotive Division, Mahindra & Mahindra Ltd at the launch.

Mahindra & Mahindra (M&M), the country’s second largest utility vehicle and the largest tractor manufacturer, is expected to see a robust growth in the June quarter net profit bolstered by a rebound in truck market and sustained demand for tractors.

According to a Reuters poll of analysts, the Mumbai-based company is seen reporting a 54 percent year-on-year increase in its stand-alone net profit to Rs 1180 crore for the quarter under review. During last year same quarter the company had posted a net profit of Rs 766 crore.

The maker of Scorpio, XUV500 and Bolero clocked a 9 percent growth in passenger vehicles (cars and SUVs) to 60779 units during June quarter while commercial vehicle sales grew by 23 percent to 56940 units.

Its total automotive volumes during the reporting period climbed by 20 percent to 140,101 units. While the company faced challenges for sales expansion with passenger vehicles due to a strong competition buyers of trucks and buses have been flocking to showrooms to renew their fleet.

As per data shared by the Society of Indian Automotive Manufacturers M&M’s PV segment market share closed at 7 percent for the June quarter while in the CV segment its share stood at 25 percent.

“We expect EBITDA margin to improve by 220 bps yoy due to significant improvement in profitability of both automotive and tractor businesses” said a report from Kotak Institutional Equities.

Maruti Suzuki surpassed M&M to emerge as the biggest manufacturer of utility vehicle even as M&M retained its position in the commercial vehicle segment at the number two spot behind leader Tata Motors.

Meanwhile total tractor volumes rose by 19 percent to 100,784 units helped by a continued upward trend due to an expectation of a normal monsoon as well as improved buying power with the buyers with better yield.

As per the Reuters poll M&M is expected to post 9.5 percent growth in net revenues to Rs 13,508 crore during the June quarter as compared to Rs 12,335 crore posted in the same quarter last year.