M&M Q1 beats forecast, stock surges 4%

The growth in the profit due to good volume performance by automotive sector and tight control on expenses

Mahindra and Mahindra (M&M) has rallied 4% to Rs 722 after reporting a better-than-expected 20% year-on-year (yoy) jump in standalone net profit at Rs 726 crore for the quarter ended June 30, 2012 on back of higher sales volume.

Analysts on an average expected a net profit of Rs 596 crore for the quarter. Total operational income grew 39% at Rs 9,367 crore on y-o-y basis.

“The growth in the profit despite the relentless increase in material costs is due to good volume performance by automotive sector and tight control on expenses,” M&M, one of the India's largest utility vehicle makers, said in a filing.

 

Operating profit increased 23% to Rs 1,169 crore over the previous year, while margins contracted about 200 basis points to 12.5% during the quarter.

The stock opened at Rs 701 and hit a high of Rs 726 on the NSE. As many as a combined 2.09 million shares have already changed hands on the counter so far, as against an average sub 1 million shares that were traded daily in past two weeks.