M&M Q1 net declines 3.4% to Rs 852 cr

Net sales also dropped 3% to Rs 9,708 cr

Weighed down by lack of new products in the passenger vehicle space and drastic fall in demand for tractors, Mahindra & Mahindra posted 3.4% fall in net profit for the quarter ended June 30, 2015. The company, however, managed to beat street estimates.

The Mumbai-based company reported Rs 852 crore net profit for the reporting quarter as against Rs 882 crore posted in the same quarter last year. A Bloomberg poll of analysts had estimated the net profit to be at Rs 741 crore.

The company received a dividend of Rs 169 crore from subsidiaries for the quarter.

Pawan Goenka, executive director, Mahindra & Mahindra said: “The monsoon has done reasonably well and because of that many of our business have done better than expected. We are under utilising our capacity like the rest of the industry but with new products coming in we will be able to spread out the fixed cost and thereby improve the margins."

Net sales of the company stood at Rs 9,708 crore during the quarter as compared to Rs 10,006 crore posted in the same quarter last year, a 3% decline.

Sales of utility vehicles where the company had a market share of 38.5% as of June 30, 2015, reported a fall of 5.4% to 49,354 units as compared to 52,180 units sold in the corresponding quarter a year earlier.

Sales of tractors in the first quarter dipped by 16% to 62,358 units as against 74,555 units sold in the same quarter last year. The dip in domestic sales, which is 95% of the total sales, was more severe at 18%.

At 1335 hours on Friday, the company's stocks on BSE were trading 1.7% higher at Rs 1,418 apiece.

“M&M Q1 PAT (standalone) came in tad ahead of estimates on higher margins. Revenues declined 4% driven by 8% decline in volumes while realisations grew 4%," said a Religare Auto report.

The company is preparing to launch a compact sports utility vehicle TUV 3OO in September followed by another launch in the same space in the final quarter. It has a further four upgrades and refresh lined up for the remaining months of the year.