M&M posts 26% rise in Q3 profit to Rs 836 crore

Firm reports 36% volume growth in the passenger utility vehicles segment

Mahindra & Mahindra (M&M), India’s biggest utility vehicle manufacturer, on Friday posted 26.3 per cent rise in net profit to Rs 836.2 crore for the third quarter ended December 31, 2012, on the back of volume performance.

The Mumbai-based world’s largest tractor company by sales volume had clocked net profit of Rs 662.2 crore in the same period last year, the company said in a filing. Its net sales for the quarter under review increased 29 per cent to Rs 10,643 crore as against Rs 8,278.38 crore in the corresponding quarter last year, the company said in a statement. The other operating income amounted to Rs 131.68 crore, whereas the company reported Rs 104.53 crore in Q3 FY12.

During the quarter, income from ‘automotive’ segment was Rs 7,360.50 crore, while that of ‘farm equipment’ was Rs 3,403.97 crore. Income from ‘other’ segments totaled Rs 14.40 crore.

In the current quarter, M&M recorded a volume growth of 36 per cent in the passenger utility vehicle segment with the sales of 70,483 units, and maintained its dominant position with a market share of around 48 per cent.

The domestic tractor industry registered a moderate growth in the current quarter of four per cent in Q3FY12 with sales of 62,522 tractors. The company’s market share during the quarter stood at around 42 per cent.

The combined gross revenues and other income of M&M and Mahindra Vehicle Manufacturers in Pune however for the quarter is Rs 11,522.3 crore as against Rs 9,035.7 crore during the corresponding period last year, growth of 27.5 per cent.

Its net profit grew 29.6 per cent to Rs 915 crore in the current quarter against Rs 705.9 crore in the previous quarter last year. The operating margin for the combined entity in the current quarter is 13.5 per cent.

“The growth in the profits of the company despite the relentless increase in material costs is due to a good volume performance by Automotive Sector and tight control on expenses,” the company said.

“Taking the combined performance of M&M and Mahindra Vehicle Manufacturers is the real reflection of reasonable performance in terms of financial and volumes,” Mithul Shah, senior auto analyst at Karvy Stock Broking, told Financial Chronicle. Although the tractor sales declined marginally, the company posted healthy margins because of improvement in the automotive sector, he said.

“We are positive on the stock as barring for a few months from now, it will rise to be a strong volume performer from the first half of 2014, as the country gears for the general elections,” Shah said.

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