Mahindra profit up 6%, misses Street estimates

The company's growth is likely to be muted due the absence of any new platform launches in FY17

Utility vehicle and tractor manufacturer Mahindra & Mahindra recorded a net profit growth of six per cent during the March quarter but fell short of street estimates.

The Mumbai-based company posted a standalone net profit of Rs 583 crore for the quarter, up from Rs 550 crore in the same time a year ago. A Bloomberg poll of analysts had forecast net profit of Rs 681 crore for the reporting quarter.

M&M’s standalone net sales grew 15 per cent during the quarter to Rs 10,666 crore from 9,288 crore in the same quarter of 2014-15.

The company’s excise break for the Pantnagar plant expired leading to a decline in margins during the quarter, executives said. However, there was a pick-up in sales during the reporting period.

Utility vehicle sales volume grew 21 per cent to 69,082 even as tractor sales grew nearly 19 per cent to 41,129. In both segments the company commanded a market share of 41 per cent during the quarter.

After five consecutive quarters of declines, the tractor industry grew 7.9 per cent in the fourth quarter of 2015-16. This was due to a marginally higher rabi grain production and low industry base.

The forecast for growth in tractor sales for the industry is 10 per cent. The company’s board recommended a dividend of Rs 12 per share of Rs 5 face value, which would absorb a sum of Rs 842 crore, M&M said.

Standalone net profit for the year ended March 31, dipped 4.6 per cent to Rs 3,167 crore from Rs 3,321 crore in 2014-15. Net sales for the year were Rs 40,396 crore, up 6.61 per cent from Rs 37,891 crore in 2014-15.  

Last year, the company launched nine vehicles, including the TUV300 and KUV100, which pushed up growth.

M&M will not be able to match that rate this year.  

“This year we will not be making any new platform launch,” said Pawan Goenka, executive director.