M&M net surges to ₹1,929 cr in Q2 on strong all-round performance

Our Bureau | | | Updated on: Nov 09, 2021
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But commodity price inflation, chip shortage continue to pose challenges

Mahindra and Mahindra’s profit rose 214 per cent to ₹1,928.64 crore for the second quarter of the current fiscal, from ₹614.64 crore reported in the corresponding quarter of the previous year. The company reported an 11 per cent increase in consolidated revenue, year on year, rising to ₹21,735.96 crore, from ₹19,509.14 crore.

While M&M reported resilient operating performance and strong recovery across group companies, major headwinds for it include, commodity price inflation, supply chain semiconductor shortage as well as freight costs increasing on imported components.

The auto and farm verticals reported stressed margins as a result of commodity price inflation and chip shortage. With consolidated profit before interest and tax decreasing 14 per cent year on year in the farm segment, and for the auto segment, PBIT reduced by 44 per cent year on year. Commodity price inflation has been a major factor, along with the shortage of the ECU chipset, which resulted in a volume loss of 32,000 units in the auto segment.

Other milestones for the farm segment, according to Rajesh Jejurikar, Executive Director of Auto and Farm segment, M&M, include a 1.9 per cent gain in market share to 40.1 per cent, second highest Q2 exports by volume at 4,100 tractors, strong PBIT margins at 18.7 per cent despite commodity inflation.

XUV700 launch

For the auto side, XUV700 saw a mammoth launch, crossing 70,000+ bookings so far and total open bookings have crossed over 1,60,000.

The three-wheeler EV segment has seen an increase in volume by 318 per cent, and according to Jejurikar, M&M enjoys best-in-class margins despite commodity inflation, some of which has been transferred to consumers through aggressive price increases, which approximate to 7 per cent since September 2020.

After completing major divestments, Mahindra is poised for major growth milestones by 2025.

These include revenue growth of 15-20 per cent in a three-year compound annual growth rate, a 10X growth in the farm machinery segment by 2027, and a growth of over 40 per cent in the tractor segment.

Mahindra also plans on being number 1 in the core SUV segment and the light commercial vehicle segment.

Jejurikar added that the chip-related supply chain issues are likely to continue into 2022, although the worse is over.

New products

On the farm machinery segmentMahindra has a strong product pipeline of 15 new products by 2027, it will explore partnerships and alliances and increase financial access through finance leasing and rentals. For Mahindra’s SUV business, 13 new products are slated for launch by 2027, of which eight will be electric vehicles. Mahindra will focus on four major brands — Bolero, Scorpio, XUV, Thar — as well as a new electric brand that is yet to be named. The company has 17 new products slated for launch on the LCV side.

Anish Shah, Managing Director & CEO, M&M Ltd, said, “We have seen significant all-around improvement in our performance this quarter. Our strong show in the auto and farm sectors was complimented well by the improved performance in the group companies. Our investments in digital platforms are doing well and present a meaningful opportunity to create and unlock value.”

Published on November 10, 2021

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