Good Year Ahead For M & M

Production in this period touched 12,970 tractors, reflecting a 44.65 per cent jump over the production in the corresponding period of the previous year. Similarly, sales have jumped 43.11 per cent to 12,880 vehicles in the period April1 - June 9. The jump becomes all the more pronounced when seen in the light of the fact that over the whole of last year, the company sold only 9,000 units.

With such an excellent performance in the first two months, and the monsoon predicted to be good, the company may come out with an excellent performance in the current year.

M&M has come out with a moderate performance for the year ending 1996-97 with the sales as well as the bottomline showing a growth of around 25 per cent.

 

In 1996-97, sales increased by 25.61 per cent to Rs 3,525.52 crore. The increase in sales is attributed to the maintenance of its market shares both in the utility vehicles and tractor segments. While the utility vehicle segment saw a growth of 18 per cent, the tractor segment showed a growth of 17 per cent.

Net profit would have been still better if not for a heavy increase in interest burden and depreciation. Due to the tight liquidity prevailing in the market, the interest burden increased by 67.20 per cent to Rs 80.51 crore.

Due to the commissioning of the small tractor manufacturing unit at Nagpur and other expansions to manufacture new models of tractors at its Kandivili plant, depreciation increased by 48.73 per cent to Rs 62.96 crore.

The market was anticipating a poor performance from the company. The scrip has come under selling pressure in the last few days.With the company set for an excellent performance in the current year, there should be a spectacular turnaround in the fortunes of the scrip.