Mahindra Q3 net profit up 12 pc at Rs 934 cr
Feb 14 2014 , Mumbai
The standalone net sales of the company declined 2.2 per cent from a year ago to Rs 10,404.91 crore in the quarter. The other in come of the company grew 27.4 per cent from a year ago to Rs 94.64 crore.
“Tractor sales in the quarter were above our expectations. In the wake of good monsoon, the domestic tractor industry continued to show robust growth,” said Pawan Goenka, executive director and president, Automotive and Farm Equipment Sectors, in a press conference.
While revenues from the farm equipment sector (FES) where M&M has 42 per cent share in tractor market, grew by 20 per cent, the automotive segment revenues came down sharply by 12 per cent.
In the quarter the company reported 20.6 per cent growth in tractor sales to 18,1566 tractors. The company’s domestic sales for tractors grew by 22.1 per cent from a year ago to 76,362 units. The Company’s market share was 41.9 per cent as against 41.4 per cent a year ago
The company said the combined net profit of M&M and Mahindra Vehicle Manufacturers rose 9.3 per cent to Rs 1000.10 crore. The operating margin of the combined entity is for the current quarter is 15 per cent as compared to 13.5 per cent a year ago.
In the passenger utility vehicle segment, the company sold 54,164 vehicles in the current quarter with a market share of 38.2 per cent. In the car segment the company sold 1967 Verito and Verito Vibe cars. The company also exported 8,492 vehicles in the third quarter.
The company said that its market share is under strain due to intensifying competition in the sub-segment of utility vehicles where it is not present effectively.
“The UV2 which is the compact, sub 4 four UV space is growing and presently commands 60 per cent of the market. That is where we are not present. This is why we are de-growing faster than the industry,” said Goenka.
The company said it is in dialogue with the Tamil Nadu government to complete the process of memorandum of undertaking and for taking possession of the land on which it intends to build a green field facility. The company said its blue print is ready for the proposed new plant and a test track.
“Capacity is likely to be deferred by a year or year and half because we have lost a year in terms of capacity growth. We have not redone any calculations on capital expenditure as of now at the end of the year we will do the calculations and see if we need to recast the forecast for investment. So at the moment it remains the same at Rs 7,500 crore but we will come back (with a revision) in May,” Goenka said.
Goenka further added that demand is expected to rise from second half of 2014-15, but the future policy direction critically depend on the outcome of the parliamentary elections due in May 2014, “We maintain at present a cautious and watchful outlook on the economy.
Analysts feel that going forward, the company would continue to do well in the tractor segment, while the UV segment will continue to remain under stress.
Mitul Shah, an analyst at Karvy Stockbroking, said, “This quarter the results were slightly above expectation as the company performed well in the tractor business. Going forward the company is expected to report double digit growth in tractor business while UV segment will continue to remain under stress for the next couple of months.
Yaresh Kothari, an analyst at Angel Broking, said, “The company’s performance was more or less in-line with expectations. Going forward tractor segment is expected to continue to perform well while UV will remain under pressure.”