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Mahindra & Mahindra on Tuesday posted a consolidated net profit of ₹161.75 crore during the second quarter, a 138.6 per cent increase compared to ₹67.79 crore it had posted in the first quarter of the year.
The net revenue during the September quarter stood at ₹11,590.32 crore, a 107.36 per cent increase to ₹5,589.43 crore it had posted in the June quarter.
The results include the combined earnings of M&M and Mahindra Vehicle Manufacturers (MVML), a subsidiary of the company.
On a year-on-year basis, the consolidated net profit during the September quarter dipped by 88.6 per cent. It had posted a consolidated net profit of ₹1,354.80 crore in the year-ago quarter. The net revenue during the second quarter of FY20 was ₹10,935.05 crore, marking a 5.99 per cent increase this year.
Buoyed by tractors
The company, on the back of its strong performance in tractors combined with its ruthless focus on cost, has achieved a high OPM and the profit after tax (before EI) in Q2 F2021 is just three per cent lower than Q2 F2020, despite a substantial fall in other income in the current quarter as compared to the previous year quarter, said M&M.
“The exceptional items on account of impairments have led to a drop in the profit after tax in the current quarter as compared to the corresponding quarter in the previous year,” it said.
In Q2 F2021, the Indian auto industry was just one per cent lower than the comparative quarter in the previous year, the company said in a statement. “It is after six quarters that the industry has shown a flat performance with the PV industry growing 17 per cent after eight consecutive quarters of de-growth,” said M&M.
“With partial reopening up of the economy in May and June, and then subsequent relaxations allowed in the reopening phases, the economy at large is adapting to operating and living in a post-Covid era. The auto industry ecosystem including suppliers and dealers was quick to bounce back and operations now are near normal despite some isolated pockets of supply side constraints that still remain,” said M&M.
Strong sales
Rajesh Jejurikar, Executive Director, Auto and Farm Sectors, M&M Ltd, said that M&M had a strong sales trajectory and low system stock.
Anish Shah, Deputy Managing Director & Group CFO, M&M Ltd, said that M&M will stay firm on capital allocation, as well as focussed on driving growth and continued improvement in international farm subsidiaries.
“Our path to 18 per cent ROE is that we have no further investment in SsangYong, Genze exit is announced, No USPS Bid for MANA and exit announced for Gipps Aerospace business,” said Shah.
It is expected that tractor demand will remain robust during the upcoming festival season, said M&M.
While kharif sowing and the recent agricultural reforms portend well for the rural economy, the turnaround in urban demand may continue to lag especially the contact-intensive services sectors, said M&M. “Manufacturing capacity utilisation is expected to recover in Q3 and activity to gain some traction from Q4 onwards. However, capex and exports are likely to remain subdued,” the company said.
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