M&M beats market estimates as Q3 net profit revs up 57%

Mahindra & Mahindra (M&M), one of India's leading automobile manufacturers, surpassed analyst estimates after reporting a 57% jump in third-quarter net profit.

Mumbai-headquartered M&M posted a consolidated net profit of Rs 1,987.44 crore for the three months ended December 2021 compared with Rs 1,268.23 crore in the corresponding period last year. 

However, net profit was only a tad higher from Rs 1,928.64 crore for the July-September period.

Analysts expected M&M’s net profit to decline 20-40% year-on-year while revenue was expected to grow 5-15% owing to a decline in auto sales.

The company's consolidated revenue from operations stood at Rs 23,594.46 crore for the December quarter compared with Rs 21,625.95 crore a year earlier.

The stock was quoting at Rs 840 apiece on the BSE in the afternoon trade on Thursday, little changed from the previous close. The stock has touched a high of Rs 978.90 and low of Rs 725 in the past 52 weeks.

On a standalone basis, net profit stood at Rs 1,353.07 crore, up 155% from Rs 530.86 crore in December 2020.

Standalone revenue from operations came in at Rs 15,238.82 crore, up 8.41% year on year.

Other Key Highlights

1) Earnings before interest and taxes (before exceptional items) declined 29% year on year to Rs 1,287 crore.

2) Margins come under pressure due to commodity inflation and shortage of semiconductors.

3) Operating margin came in at 11.9% against analyst expectations of 14-15%.

4) Global shortage of semiconductors and ECUs impacted production and sales during Q3.

5) M&M has more than 155,000 open bookings, of which over 70,000 are for the newly launched XUV700.

6) Farm business delivered excellent performance with second highest operating profit and domestic volume.

Management Commentary

M&M managing director and CEO Anish Shah said that the company recorded an improvement in performance across multiple businesses.

“Our auto business has done well despite supply-side challenges while our farm business has shown market share increase despite a slowdown in the market,” Shah said.

M&M Executive Director Rajesh Jejurikar said demand for the entire automotive product portfolio remains strong. “The order book for XUV700 and Thar reflects the customer and market success of these new launches,” he said.

“With better availability of semiconductors, we hope to build volume growth momentum in the fourth quarter of FY23 in our journey to being number 1 in core SUVs,” he said.

Also read: Redington shares zoom higher as company records the highest PAT ever in history!