M&M net profit up 7.5% at Rs 605 crore

Tractor and utility vehicle maker Mahindra & Mahindra on Monday reported a net profit of Rs 605 crore for the quarter ended June 30 at a standalone level, a growth of 7.55 per cent, even as higher commodity costs dented margins.

The growth beat street expectations, primarily on the back of strong volume growth. The Mumbai-based company had posted a net profit of Rs 562 crore during the same quarter last year. Auto sector volumes during the quarter grew 20.9 per cent. In the utility vehicle segment, where it sells the Xylo, Scorpio and Bolero, M&M saw growth of 14.3 per cent, at 44,407 units.

It out-performed the tractor industry average, selling 57,500 units as compared with 47,916 units earlier, a growth of 20 per cent. Domestic tractor industry sales grew 13.7 per cent to 133,103, against 117,099 tractors sold during the same quarter last year. It said the share in the tractor segment had grown to 43 per cent from 40.7 per cent during the two quarters.

Despite the Reserve Bank’s policies leading to a sharp rise in loan rates, with inevitable adverse impacts on domestic demand and industrial growth, the company said prospects for the agricultural and services sector growth “remain reasonably robust and our business outlook for the year remains positive but watchful”.

Net sales grew to Rs 6,673 crore during the quarter, an increase of 30 per cent as compared to Rs 5,124 crore in the corresponding quarter a year earlier. The share of the automotive segment in total net revenue went up to 57 per cent from 55 per cent earlier. The company saw a nearly 33 per cent rise in costs at Rs 5,946 crore during the quarter, as against Rs 4,482 crore seen in the same quarter last year. Higher cost of commodities such as that of steel, rubber and other metals contributed.

M&M’s shares, sliding in recent days on fear of the government raising diesel prices, rose 3.7 per cent during market hours to reach Rs 679.40. M&M's entire utility vehicle range runs only on diesel.