Mahindra CIE surges 13% on stable operational performance in March quarter

In Q1, standalone EBITDA margin improved 310 basis points (bps) to 15.5 per cent from 12 per cent in Q4.

Shares of Mahindra CIE Automotive surged 13 per cent to Rs 225 on the BSE in Tuesday’s intra-day trade, after the company reported stable standalone operational performance in the March quarter (Q1CY22).

The auto components and equipments maker saw improvement in EBITDA margin by 310 basis points (bps) to 15.5 per cent in Q1CY21, as against 12 per cent in Q4CY21. The company reported standalone profit after tax of Rs 169 crore in Q1CY22, against a loss of Rs 76 crore in Q1CY21. Sequentially, the company registered a profit of Rs 43 crore in Q4CY21.

Meanwhile, the stock rallied 20 per cent in the past two trading days. At 09:43 am; it traded 12 per cent higher at Rs 223, as compared to 1.2 per cent rise in the S&P BSE Sensex. Earlier, the stock had hit a 52-week high of Rs 311.65 on November 16, 2021.

Following this quarter, the company’s standalone sales grew 15 per cent year-on-year (YoY) to Rs 1,202 crore from Rs 1,049 crore in previous year quarter. "EBITDA margin above 15 per cent despite raw material increase effect (passed through without margin) and 15 per cent sales growth is mainly based on raw material price increase," the management said.

However, on a consolidated basis, EBITDA margin declined 210 bps to 12.6 per cent from 14.7 per cent due to energy price rise and general inflation. On the contrary, margin improved 190 bps from 10.7 per cent based on good performances in India, sequentially. The company also registered 17 per cent growth YoY in sales at Rs 2,444 crore from Rs 2,086 crore in Q1CY21.

The management also remains positive on two-wheeler and tractor segments after a weak show in last quarter. “While the semiconductor shortage hit the light vehicles segment throughout the year, the latter half of the year saw a slowing down of the two wheelers and tractors market as rural sentiments weakened. But the medium-term prospects of the market segments are expected good,” the management added in its annual report.

Mahindra CIE's Indian operations plan to make use of these opportunities and grow faster than underlying market segments. "The order book situation is such that many verticals are going in for capacity expansion. All the business verticals in India are pushing to increase exports. This requires a continued focus on operational excellence that can make sure that the company’s operations in India are world class and meet the global standards in manufacturing excellence that CIE pursues," the management added.