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Informist, Wednesday, Jul 31, 2024

 

--M&M: Apr-Jun SUV revenue mkt share up 130 bps YoY at 21.6% 

--M&M: Domestic industry outlook improving for farm equipment segment 

--M&M: Seeing moderation in international demand for farm equipment 

--M&M: Open bookings for SUVs at 178,000 till Jul 1 

--M&M: Apr-Jun PAT dn due to one-time gain last year from stake sale 

--M&M: Optimistic about mid-to-high teens growth in SUVs FY25 

--M&M: Dealer stocks remained higher Apr-Jun on polls, extreme weather 

--M&M: Average selling price of SUVs was 1.5 mln rupees in Apr-Jun 

--M&M: Expect some cannabilisation between 3, 5-door Thar variants 

--M&M: Creating 4,000-5,000 units additional mfg capacity for Thar Roxx 

--M&M: To be ready with 100,000 capacity for e-vehicles by FY25-end 

 

By Darshan Nakhwa

 

MUMBAI – Mahindra & Mahindra Ltd today reported a decline of 5.3% on year in the bottomline for the June quarter on account of a high base of last year, when it had recorded a one-time gain of 7.63 bln rupees. However, without the one-time gain in the year-ago quarter's net profit, the automaker's metric would have expanded by nearly 31% in Apr-Jun. The company earned a net profit of 26.13 bln rupees, compared with 27.59 bln rupees in the year-ago period.

 

"We had a gain of 4.05 bln rupees on our KG Mobility investment at the time of listing of the stock, and we recorded a gain of 3.58 bln rupees on sale of our stake in Mahindra CIE Automotive (in Apr-Jun 2023)," the company's management said in a post-earnings press meet. Analysts projected the company's net profit at 27.90 bln rupees for Apr-Jun.

 

Mahindra & Mahindra's standalone net profit was also affected by a sharp decline in other income and higher tax expense. While its other income fell 61.2% on year to 2.58 bln rupees in Apr-Jun, its tax outgo rose to 7.94 bln rupees from 5.82 bln rupees. 

 

In Apr-Jun, the company's operating profit margin expanded to 15.17% from 14.55% in the year-ago period. Its operating margin, excluding investment-related income/loss, expanded to 14.88% from 13.61% in the year-ago period. 

 

The earnings before interest, taxes, depreciation, and amortisation of the company, came in at 41.16 bln rupees in the June quarter, marking an increase of 16% on year. Brokerages estimated the company's EBITDA at 39.01 bln rupees.

The automaker's income from operations rose 11.2% on year to 271.33 bln rupees, primarily driven by higher sales volumes and price hikes. Brokerages estimated the topline at 281.47 bln rupees. Revenue from the automotive segment rose 13.09% on year to 189.47 bln rupees and that from farm equipment declined by 9.22% on year to 81.44 bln rupees.

 

Mahindra & Mahindra's automotive sales volume grew 14% on year to 211,550 units in Apr-Jun. Its domestic passenger vehicle despatches rose 24% on year to 124,248 units, and included only utility vehicles. During the quarter, the company's average selling price of sport utility vehicles was 1.5 mln rupees. Its segment revenue market share expanded 130 bps on year to 21.6% in the June quarter. 

 

In the June quarter, the company recorded an average of 41,000 new bookings per month for its sport utility vehicles and cancellations of 10% per month. The automaker had 178,000 open bookings as of Jul 1, compared with 220,000 open bookings till May 15. In 2024-25 (Apr-Mar), the company expects the segment sales to grow by mid-to-high teens. 

 

Responding to a question on rising inventory at dealerships, M&M's Executive Director and Chief Executive Officer of Auto and Farm divisions Rajesh Jejurikar said dealer stocks were higher during the quarter by four-five days on account of a slowdown in demand due to the General Election and extreme weather conditions. However, the demand has picked up since June and dealer stocks are expected to correct to normal levels over the next two months.

 

On the question of a likely cannibalisation in sales of three-door Thar after the launch of a new five-door model on Aug 15, Jejurikar said, "There will be some cannibalisation certainly between Thar Roxx and the current Thar that's factored into the way we have created capacity." The company has created 4,000-5,000 units per month additional manufacturing capacity for Thar Roxx. Currently, it has a capacity to manufacture 49,000 sport utility vehicles per month which will be raised to 64,000 unit per month by the end of the 2024-25. The automaker also plans to add 100,000 capacity for its Born Electric vehicles by the end of the year. 

 

On the commercial vehicles front, the company reported sales growth of 2.1% on year to 62,522 units. In Apr-Jun, the commercial vehicle segment witnessed some disruption in April and May due to the General Election.

 

The company's automotive sales volume also includes 22,982 units sold by a separate entity, Mahindra Last Mile Mobility Ltd, which was demerged in September 2023. However, revenue in standalone results does not include realisation from these volumes, the company said.

 

During the quarter, the company's tractor sales rose 5% on year to 120,492 units. In an earnings presentation, the company said the domestic industry outlook was improving for the farm equipment segment. However, there was some moderation in international demand.

 

On total expenses front, the automaker reported a growth of 10.4% on year to 239.84 bln rupees in the June quarter. The cost of materials consumed, the biggest expense incurred by the company, rose 11.1% on year to 184.10 bln rupees. Its employee-related costs rose 11.3% on year to 11.75 bln rupees, and other expenses grew 13.2% on year to 19.02 bln rupees.   

 

The company announced its earnings during market hours today. Its shares ended 0.5% lower at 2,907.80 rupees on the National Stock Exchange.  End

 

With inputs from Noel John

Edited by Manisha Baxla

 

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