M&M Q1 preview: Cost pressures likely to dent margins; PAT growth seen flat

Mahindra & Mahindra Q1 preview: Auto manufacturer Mahindra & Mahindra (M&M), slated to post its June quarte (Q1) results for the financial year 2026-27 (FY27) this week, will likely post strong revenue growth, though profit growth may remain muted and margins could decline, hit by higher raw material costs and product mix. 

 

M&M, which manufactures SUVs and modern electric vehicles like the Scorpio-N, XUV700, and Thar, will post its Q1 FY27 results on Thursday, July 30.

 

Auto sector Q1 preview

Commenting on the overall auto sector expectations, HDFC Securities said that announcements of further price hikes for June-July by certain original equipment manufacturers (OEMs) led to some pre-buying in Q1. However, consumer sentiment dipped since the better times post the GST rate cut, with recently launched models aiding growth. 

 

 

It added that the momentum is also starting to shift in favour of electric vehicles (EVs) on the back of fuel price hikes and new launches in the segment. However, supply issues did limit the growth for certain companies, with higher impact seen in M&M (SUVs), Hyundai Motor India, and Tata Motors PV, it noted. 

 

M&M Q1 preview: What to expect?

Brokerages expected a muted quarter for M&M as higher input costs could mitigate price hikes. Revenue is seen growing in double digits, while profit is likely to be flat. Take a look at top brokerages' expectations:

 

MOFSL 

Motilal Oswal Financial Services (MOFSL) said M&M likely posted a strong 18 per cent year-on-year (Y-o-Y) growth in tractors and an 11 per cent Y-o-Y rise in passenger vehicles, which could drive the topline higher by 19.1 per cent to ₹40,606 crore. 

 

However, profit growth is seen to be flat at 0.3 per cent Y-o-Y to ₹3,458.5 crore in Q1 FY27. For the auto segment, price hikes in April are unlikely to be sufficient to offset cost pressures, leading to a 200 bps sequential contraction in segmental margins, it added. 

 

Kotak Institutional Equities 

This domestic brokerage expects a 22 per cent Y-o-Y increase in revenues in Q1 FY27 to ₹41,515 crore, led by a 23% Y-o-Y increase in automotive segment revenues amid strong export volumes, LCV and SUV segments and a 19 per cent Y-o-Y increase in tractor segment revenues, driven by 18% Y-o-Y increase in volumes. 

 

Kotak Institutional Equities (KIE) is building in a 1% Y-o-Y increase in tractor segment average selling price (ASP) and 4% Y-o-Y increase in automotive segment ASPs.

 

Meanwhile, reported profit is seen rising 2.3 per cent Y-o-Y, but falling 5.6 per cent sequentially to ₹3,529.2 crore during the quarter under review.

 

It further estimates overall earnings before interest, tax, depreciation and amortisation (Ebitda) margin to decline by 150 bps quarter-on-quarter (Q-o-Q) due to commodity headwinds and higher mix of EVs, partly offset by operating leverage benefit and price increases. Overall, it expects Ebitda to grow by 7% on a yoy basis in 1QFY27.

 

HDFC Securities

Lastly, HDFC Securities said that higher realisations on the back of price hikes in ICE SUVs and tractors could drive revenue by 24 per cent Y-o-Y to ₹42,253 crore during the quarter under review. However, profit is expected to be muted, up 0.2 per cent Y-o-Y and down 7.5 per cent Q-o-Q. 

 

It further added that Ebitda margin could contract 120 bps QoQ and 174 bps YoY to 12.3 per cent, mainly impacted by higher raw material costs.

 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.