M&M Q2 net jumps 25% to Rs1,331 cr; announces 1:1 bonus

Utility vehicle and farm equipment maker Mahindra and Mahindra Ltd (M&M) has reported a 25-per cent jump in its stand-alone net profit for fiscal second quarter to Rs1,331.57 crore, on the back of rising tractor sales.

The board of directors of the company at its meeting on Friday recommended issue of bonus shares in the ratio of 1:1, ie, one bonus share of Rs5 each for every fully paid-up share of Rs5 held.

Mahindra and Mahindra's net profit for the quarter ended 30 September 2017 stood at Rs1,331.57 crore against Rs1,067.03 crore in the year-ago quarter.

Gaining from a richer product mix and festive demand, net sales of the company, which makes the Scorpio and XUV5OO SUVs, increased 6.4 per cent to Rs12,182.07 crore from Rs11,446.14 crore in the year-ago quarter..

Revenue from the automotive sector was flat, while that from the farm equipment segment rose 21.4 per cent. The automotive segment makes up about 65 per cent of the company's revenue and farm equipment contributes to 32 per cent.

M&M's tractor sales, including exports, rose 25 per cent year-on-year in the July-September 2017 quarter while domestic tractor sales grew 33.1 per cent as a near-normal monsoon spurred demand.

Earnings before interest, tax, depreciation and amortisation (EBITDA) margin, a measure of operating profitability, at the consolidated level rose 190 basis points to 16 per cent.

The margins were ''aided by a richer product mix, among other factors'', group chief financial officer V.S. Parthasarathy told a press conference.

Revenue for the quarter stood at Rs12,182.07 crore against Rs11,446.14 crore in the year-ago quarter, the company stated. The revenue figures, however, are not comparable to previous quarters owing to the accounting treatment of excise duty under the goods and service tax regime, which was implemented from 1 July, it added.

"It was a very good quarter from operational and financial performance point of view. A normal monsoon and an exceptionally good festive demand for tractors helped the numbers. There was also a reasonably good demand for automotive business," Mahindra & Mahindra managing director Pawan Goenka said.

He said during the quarter, the company clocked the highest operating margins for both tractor and automotive businesses.

During the quarter, the company sold 1,29,754 units of which tractor volumes stood at 76,984 units including exports of 11,755 units.

In the festival month of September, the company sold the highest number of Scorpios since the launch of its flagship SUV and has also strengthened the UV portfolio with variants of TUV300 in September and a KUV100 in October.

Truck sales stood at 2,079 units, a growth of 86 per cent over the previous year period, it said.

On the outlook, Goenka said, "right now there is nothing that concerns us. Growth momentum is likely to witness a cyclical bounce back once the effects of some of the recent transient factors fade away and the economy adjusts to GST."

Stating that the days of 20 per cent growth are behind the industry, Goenka said 6-8 per cent growth is good enough given the present market conditions

With a robust product pipeline, Goenka said, growth would continue going forward driven both by volumes, new launches and refreshes.

On supplying 150 e-vehicles to the EESL, Goenka said the first batch of the e-Veritos will be dispatched on 12 November and the entire order will be completed in phased manner within the 30 November deadline.

Goenka had earlier said that they would lose money on every every vehicle. M&M had originally quoted Rs2.3 lakh more than the winning Tata Motors bid, but later matched the winning price quote.

He said the company has put on hold plans manufacture scooters at its French arm Peugeot Motorcycles for the domestic market. Mahindra owns 51 per cent stake in the French two-wheeler maker.

Mahindra will also announce its plans to open an assembly plant in the Detroit area of the US by 20 November, he added.