M&M hits a bump after Q1 result

Mahindra & Mahindra dropped 3.56% to Rs 529.75 at 134:18 IST on the BSE after the company's combined profit from ordinary activities after tax rose 80% to Rs 2260 crore in Q1 June 2019 over Q1 June 2018.

The result was announced during market hours today, 7 August 2019.

Meanwhile, the S&P BSE Sensex was down by 40.21 points or 0.11% at 36,936.57.

On the BSE, 2.79 lakh shares were traded in the counter so far compared with average daily volumes of 1.15 lakh shares in the past two weeks. The stock had hit an intraday high of Rs 550.8. The stock hit an intraday low of Rs 527.9 which is also a 52-week low for the counter. The stock hit a 52-week high of Rs 992 on 30 August 2018.

Mahindra & Mahindra (M&M) said combined revenues and other income fell 4% to Rs 12997 crore. Combined operating profit margin (OPM) was reported at 14% in Q1 June 2019, lower than 15.8% in Q1 June 2018.

The results for M&M include the combined results of Mahindra and Mahindra (M&M) and Mahindra Vehicle Manufacturers (MVML), which is a manufacturing unit of M&M.

Tractor demand in Q1 June 2019 remained sluggish and was adversely impacted due to a weak sentiment in the agro-economy resulting from the delay in seasonal monsoon, poor spatial distribution in June and weak agricultural incomes impacted by poor price realization. In Q1 June 2019, the domestic tractor industry declined by 14.6% with sales of 1,91,305 tractors, against 2,23,937 tractors sold during Q1 June 2018. In this period, in the domestic market, the company sold 82,013 units with a market share of 42.9%.

"The IMF has pared down its projections yet again for global as well India's growth in its latest July 2019 outlook. Domestically, data broadly paints a picture of subdued demand, notably in private consumption with firms and households continuing to hold back spending. Monsoon, which is crucial for farm output and growth, has played catch up lately, thanks to copious July rainfall, after a delayed and patchy start. The India Meteorological Department (IMD) has forecast a zero deficit monsoon in the second half of season, which bodes well for cumulative rainfall as well as Kharif acreage. The resultant precipitation and soil moisture could also turn out to be positive for Rabi crops. The lagged effect of interest rate cuts, liquidity infusion and targeted fiscal spending post budget, especially government actions on improving incomes for farmers, cash transfers and sops for affordable housing, could provide support to growth going forward. However, given the current challenging global and domestic growth environment, a concerted policy effort will be required to prop sentiment, put a floor under consumption and revive growth," M&M said in its outlook.

Mahindra & Mahindra (M&M) operates in automotive segment comprising of sales of automobiles, farm equipments and sale of spare parts.

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