M&M Q2 Results: Firm posts PAT at Rs 2,090, beats estimates

Homegrown auto major Mahindra and Mahindra (M&M) Friday beat street estimates to report a 46% increase in net profit at Rs 2090 crore for the second quarter ended Sep 30, 2022 driven by strong demand for passenger vehicles and farm equipment.

The company had posted net profit of Rs 1,433 crore in the corresponding period of the last financial year. Reliance Securities had expected the company to register net profit of Rs 2060 crore in the quarter under review.

Total vehicles sales soared 75% to 174,098 units, while it had open bookings for more than 260,000 SUVs. Sales of tractors in the period under consideration inched up 5% to 92,590 units.

Revenue from operations went up 56.5% during the quarter to Rs 20,839 crore. Earnings before interest, tax, depreciation and amortization (Ebitda) rose 50.3% to Rs 2496 crore.

Anish Shah, Managing Director & CEO, M&M, said, “Our robust financial results the progress we have made on our strategic imperatives. While the auto segment has led growth, we have seen steady performance across our group companies."

Mahindra farm equipment division witnessed the highest second-quarter volume this fiscal. The automobile segment too posted record volumes last quarter. The company said that exports for both vehicles and tractors remained strong in the period under review.

Rajesh Jejurikar, Executive Director, M&M, said, the company has seen an action-packed quarter with multiple product launches and new products across segments, in addition to partnership announcements with BII and Volkswagen.

“We recorded our highest quarterly revenue for auto and farm segments. In SUVs, we continue to be the revenue market share leader. Festive sales have been strong this year across auto and farm sectors. With the unveil of the XUV4OO and our Born Electric Vision, we enter the electric SUV segment and aim to establish leadership position in the future”, added Jejurikar.

With a strong orderbook for its vehicles, Mahindra & Mahindra is looking at increasing its production capacity by 69% to 49,000 units per month by the end of Q4FY24, from 29,000 units per month in Q2FY23. The company said that the incremental capacity will help reduce waiting periods of new launches and also meet any uptick in exports.

Sustained demand for passenger vehicles, along with an easing of semiconductor shortages and high raw material costs - which have disrupted production in the industry since the pandemic - are expected to benefit automakers.

“Whilst M&M is expected to face some volume pressure owing to semiconductor issue over near term, we believe new products and stronger order book with record high bookings for new XUV700 and new Scorpio would drive its overall volume and profitability”, said Mitul Shah, Head of Research, Reliance Securities, adding the brokerage expects the domestic PV industry to continue to show positive momentum this fiscal, with healthy volume in the second half which would support M&M’s business.