Mahindra & Mahindra (M&M) and Mahindra Vehicle Manufacturers (MVML)​ today announced its Q3 FY 2019 results, which saw the company reporting revenue of Rs 13,235 crore, an increase of 14 percent YoY.  While the operating margin is 13.2 percent (Q3FY2018: 14.7%), the company reported PAT of Rs 1,476 crore*, up 60 percent (* including one-off gains).

During Q3 FY2019, the company sold 133,508 vehicles (+10%); 87,036 tractors (+13%) and exported (vehicles + tractors) 12,363 units (+8%).

M&M says during Q3 F2019, the Indian auto industry (excluding two- wheelers) saw flat performance with a de-growth of 0.3 percent. This flattening of growth was driven by the PV industry, which reported a de-growth of 0.8 percent (UV segment de-growing 2.9%) and the M&HCV goods industry de-growing by 8.2 percent.

The de-growth in the M&HCV industry was primarily due to the implementation of new axle loading norms, which created surplus capacity in the short term, resulting in reduction or temporary suspension of fleet purchase plans by transporters.

In terms of PV sales during the festive season (September-November 2018) did not meet industry expectation, which was primarily due to softening of urban demand. The urban sentiment was subdued largely on account of an uncertain economic scenario arising from the dollar rate movement, fuel prices and stock market performance.

M&M says at the same time, the rural sentiment was positive, driven by three consecutive years of an almost normal monsoon, five consecutive good harvests, continued government focus on agricultural & rural development and sustained investment in infrastructure and road projects.

In Q3 FY2019, the total domestic automotive volume for M&M grew by 9.6 percent with the LCV< 2-tonne (mini truck segment) and the LCV 2-3.5-tonne pik-up segment growing by 37.5 percent and 14.4 percent respectively over the corresponding quarter previous year. The company exported 9,652 vehicles during the current quarter, a growth of 36.6 percent over the corresponding quarter previous year.

The domestic tractor industry witnessed growth of 19.2 percent with its highest ever Q3 sales of 217,054 tractors in Q3 F2019 against 182,133 tractors sold during Q3 FY2018 on account of the festive season. The company sold 87,036 tractors in Q3 FY2019 as compared with 76,943 tractors sold in the corresponding quarter previous year, a growth of 13.1 percent.

M&M says India's GDP growth slowed down to 7 .1 percent YoY in Q2 F2019, after four consecutive quarters of acceleration, which was weighed down by moderation in private consumption and a drag from net exports.

However, gross fixed capital formation has been a redeeming feature and clocked double-digit growth for the third consecutive quarter in Q2, on the back of public spending on highways and rural infrastructure. The growth in government final consumption expenditure, buoyed by higher government spending has been supportive and remains the key driver of growth. Importantly, the interim budget has announced income support scheme for farmers about 120 million households who would receive income support worth  around Rs 6,000 a year.

This should buoy farmer incomes and support rural consumption. In addition the improving credit growth and liquidity conditions should also help give a fillip to growth. Global expansion has weakened and risks to global growth have tilted to the downside. The escalation of trade tensions beyond those already anticipated and tightening of financial conditions are a key source of risk to the outlook.

M&M says it is watchful to the potential triggers including a 'no-deal' Brexit and a greater-than envisaged slowdown in China.