Mahindra & Mahindra surges after reporting impressive Q2 results

In the last one year, the company’s stock price went from Rs 619.65 to Rs 892.90 on November 9 2021, delivering returns of 44%. The stock hit a 52-week high of Rs 970.95 on October 13, 2021.

Incorporated in 1945, Mahindra & Mahindra began its journey by starting as a steel trading company. The company eventually expanded its business operations and today it is one of the largest vehicle manufacturers by production in India. At present, the company’s automotive segment comprises sales of automobiles, spare parts and related services, whereas its farm equipment segment comprises sales of tractors, spare parts and related services. It is one of the leading auto companies in India and enjoys a leadership position in utility vehicles.

The company’s Q2FY22 results are released. Let’s have a quick look at the financial highlights.

On a consolidated basis, the company’s net revenue increased by 11.67% YoY to Rs 21,469 crore. This growth came on the back of segmental growth in the automobile, real estate and hospitality businesses. The PBIDT (ex OI) went up 17.99% to Rs 4891.5 crore while the corresponding margin expanded by 122 bps to 22.78%. This improvement was driven by a rise in revenue with a relatively slower increase in expenses. Lastly, the PAT went up by a whopping 272% and stood at Rs 2,031.54 crore.

Let’s understand how the company achieved this performance.

Firstly, to tackle the issue of rising commodity prices, the company passed on the price increase to its customers as well as undertook aggressive cost re-engineering. Secondly, the challenge of rising freight costs was tackled by implementing route and cost optimization. During the quarter, the company experienced strong growth in exports both in auto and farm businesses. The automotive segment has a very healthy booking pipeline and the demand for the company’s products remains buoyant.

The company reported four consecutive blockbuster launches, with the launch of XUV 7OO leading the way. This particular model received an overwhelming response, and within the first three hours of launch, the company registered 50,000 bookings.

Similarly, the farm business delivered an excellent performance with second-highest Q2 for PBIT, domestic volumes, and export volumes. With Yuvo Tech+ tractors launched in the 35, 39 and 42 HP range, the market share for this segment went up by 1.9%. Going forward, the company plans to launch 23 new products under core SUV, EV and LCV segments by 2026.

Reacting to this development, at the closing bell on Wednesday, the share price of Mahindra & Mahindra Ltd was trading at Rs 917.40, an increase of 2.74% from the previous day’s closing price of Rs 892.9 on BSE.