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M&M tumbles after muted Q3 profit

Capital Market 

Mahindra & Mahindra (M&M)'s profit after tax (excluding one-off items and EI) rose 7% to Rs 934 crore on a 6% decline in revenue to Rs 12,120 crore in Q3 December 2019 (Q3 FY20) over Q3 December 2018 (Q3 FY19).

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

The Q3 earnings were disclosed on Saturday, 8 February 2020. Shares of M&M tumbled 5.26% to Rs 538.45. It traded in a range of Rs 567.70 and Rs 537.55 so far.

The combined EBITDA grew 1.60% to Rs 1,793 crore in Q3 FY20 from Q3 FY19. In Q3 FY20, M&M accounted exceptional and one-off items Rs 554 crore as compared to a net gain on account of exceptional and one-off items of Rs 519 crore in Q3 FY19.

The combined operating margin (OPM) stood improved to 14.8% in Q3 FY20 as against 13.2% in Q3 FY19.

The vehicle sales fell 8% to 1.23 lakh units in Q3 FY20 from 1.33 lakh units in Q3 FY19. Tractor sales declined 6% to 81,435 units in Q3 FY20 compared with 87,036 units in Q3 FY19. Total exports slipped 22% to 9,633 units in Q3 FY20 from 12,363 units in Q3 FY19.

In Q3 FY20, both the Indian auto and tractor industry has shown some signs of trend reversal and has seen moderation in the double digit de-growth seen in Q1 FY20 and Q2 FY20. Good monsoons, the festive season demand, improved liquidity conditions, new launches, especially in the Utility Vehicle (UV) segment and special schemes offered by OEMs for the auto industry were the key reasons for this moderation in degrowth. The unseasonal rains in the month of October 2019 did cause some damage to the Kharif crop, but the sentiment in the agri and rural economy is fairly upbeat with good sowing of Rabi crops supported by very good water reservoir levels and government announcement for thrust on infra projects, M&M said in a statement.

In its outlook, M&M said that there are tentative signs that manufacturing activity and global trade are bottoming out. Besides, a broad-based shift toward accommodative monetary policy, US-China trade deal, and diminished uncertainties around Brexit, have boosted market sentiment.

Meanwhile, M&M said that Anand Mahindra will continue as the executive chairman of the company upto 11 November 2021.

M&M's segments include automotive, farm equipment, financial services, real estate, hospitality and others. Automotive segment comprises of sale of automobiles, spares, mobility solutions and construction equipment. Its farm equipment segment comprises of sale of tractors, implements and spares.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, February 10 2020. 10:31 IST