M&M posts Q1 profit of Rs 856 crore on tractor demand, new launches

Continued focus on cost optimisation and operating leverage helped Mahindra & Mahindra (M&M) maintain margins and post a Q1 (April-June 2021) revenue of Rs 11,765 crore (Q1 FY2021: Rs 5,589 crore). The Q1 profit came in at Rs 856 crore in Q1 FY2022 and the operating margins were 13.9 percent, despite the recent spike in commodity prices and other challenges including the second wave of Covid-19.

Though on a year-on-year comparison the PAT is significantly higher, compared to Rs 68 crore in Q1FY2021, one must remember that Q1 of last fiscal was practically a washed-out quarter on account of the country-wide lockdown to contain the spread of Covid-19.

The Q1 PAT also includes an exception item (EI) of Rs 78 crore on account of impairment provision for long-term investments. On a sequential comparison too, the profit numbers got a significant boost from net profit of Rs 163 crore in Q4 FY2021.

Anish Shah, MD and CEO, Mahindra & Mahindra said, “Our focus on operational efficiency and financial discipline gives us the confidence that our core performance will continue. Our farm business delivered yet another exemplary quarter result, while our auto business showed demand recovery. Our growth gems are seeing good momentum and we will continue our stringent focus on fiscal discipline.”

Farm equipment and automotive segment drive growth
The tractor industry witnessed strong demand growth of 39 percent this quarter and led to 48 percent rise in M&M’s tractor volumes. This resulted in the highest domestic market share in 8 quarters at 41.8% percent.

In fact, M&M’s farm business delivered highest ever first quarter PBIT of Rs 1,081 crore.

The automotive segment revenue of Rs 6,050 crores and PBIT of Rs 103 crores is supported by a series of new launches including the Supro Profit Truck launched on July 7 and the Bolero Neo launched on July 13. In just about three weeks, the Bolero Neo has received over 5,500 bookings. 

Rajesh Jejurikar, executive director, Mahindra & Mahindra added that the, “The demand for our key automotive products also remains strong. With upcoming launch of our most anticipated product XUV700, we plan to ride on the festive season with strong volume growth aided by rebound in Indian economy. However, commodity inflation and semi-conductor supply issues continue to be of concern.”

The company continues to focus on cost optimisation and reduction of fixed expenses. Manoj Bhat, Group CFO, Mahindra & Mahindra pointed out that, “Our capital allocation actions delivered resilient financial results, despite significant headwinds of the pandemic and high commodity price inflation.”

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