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M&M Q2 Preview: Operating profit may climb up to 31% YoY; revenue eyed

Brokerages anticipate robust revenue growth driven by improved volumes and realisations, with mixed expectations on margin performance across segments

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Tanmay Tiwary New Delhi

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M&M Q2FY25 results preview: Original equipment manufacturer (OEM) Mahindra & Mahindra (M&M) will announce its September quarter of financial year 2025 (Q2FY25) results on Thursday, November 07, 2024. 
 
Brokerages anticipate robust revenue growth driven by improved volumes and realisations, with mixed expectations on margin performance across segments. 
 
Analysts at Nuvama Institutional Equities highlighted solid year-over-year (YoY) growth in automotive and farming segments, projecting revenue at Rs 26,815.8 crore. InCred Equities, on the other hand, expects selective industry growth, noting that M&M’s revenue may reach Rs 27,351.8 crore, aided by potential from the new EV policy. 
 
Key focus areas across the board include UV production ramp-up and tractor demand outlook.
 
 
Additionally, M&M saw record monthly SUV sales in October 2024, which rose 25 per cent year-on-year (Y-o-Y) to 54,504 units, from 43,708 units in October 2023.
 
M&M’s overall sales for October 2024 stood at 96,648 units, including exports. The automobile giant’s tractor sales zoomed 30 per cent annually to 65,453 units, from 50,460 units in October last year.
 
Apart from that, on the bourses, M&M shares have surged over 29 per cent in the past six months and nearly 69 per cent this year-to-date (Y-T-D). 
 
At 9:25 AM, M&M shares were trading flat at Rs 2,883.95. In comparison, BSE Sensex was trading marginally lower at 78,725.83 levels.
 
Meanwhile, here’s a look at what brokerages expect from M&M in Q2FY25:
 
Nuvama Institutional Equities  
 
Analysts at Nuvama Institutional Equities anticipate revenue growth year-on-year (Y-o-Y) due to better volumes and realisations, with Ebitda margin improvement driven by stronger performance in both the automotive and farming segments. 
 
Key focus areas, analysts believe, are the production ramp-up for utility vehicles (UVs) and the outlook for tractor demand. 
 
Meanwhile, they project revenue at Rs  26,815.8 crore (up 10 per cent Y-o-Y), Ebitda at Rs  3,704.3 crore (up 21 per cent Y-o-Y), and an adjusted profit after tax (PAT) of Rs 3,383 crore (up 4 per cent Y-o-Y).
 
InCred Equities
 
InCred analysts noted that while industry volume growth is selective this quarter—2Ws and tractors show growth while cars and commercial vehicles (CVs) show weakness—the new EV policy offers optimism. They expect double-digit Y-o-Y Ebitda growth for only a few companies, with most showing single-digit growth. 
 
Therefore, M&M’s revenue is estimated at Rs 27,351.8 crore (up 11.7 per cent Y-o-Y), Ebitda at Rs 3,848.6 crore (up 18.3 per cent Y-o-Y), and adjusted PAT at Rs 3,932.9 crore (up 16.6 per cent Y-o-Y).
 
Motilal Oswal
 
Brokerage firm Motilal Oswal expects a 13 per cent Y-o-Y increase in auto volumes and a 6 per cent rise in tractor volumes, projecting a sequential 140 bps contraction in Ebitda margin due to a weaker mix. They see profit before interest, tax (PBIT) margins remaining stable at 9.6 per cent in autos, while the farm equipment segment (FES) margin is likely to dip 100 bps Q-o-Q to 17.5per cent due to lower volumes. 
 
Consequently, the revenue is expected at Rs  27,230.7 crore (up 12 per cent Y-o-Y), Ebitda at Rs  3,684 crore (up 20.2 per cent Y-o-Y), and net profit at Rs 3,366 crore (down 2.5 per cent Y-o-Y).
 
Kotak Institutional Equities 
 
Kotak Institutional Equities analysts estimate a 13 per cent Y-o-Y revenue increase for Q2FY25, with an 8 per cent Y-o-Y rise in tractor segment revenues (driven by 4 per cent Y-o-Y volume growth) and a 15 per cent Y-o-Y increase in automotive segment revenues due to strong average selling prices (ASPs). 
 
They anticipate a 30 bps Q-o-Q decline in Ebitda margin due to an inferior segment mix and negative operating leverage, partially offset by raw material tailwinds. 
 
Thus, Kotak Institutional Equities forecasts revenue at Rs 27,505.2 crore (up 13.1 per cent Y-o-Y), Ebitda at Rs 4,013.8 crore (up 30.9 per cent Y-o-Y), and reported PAT at Rs 4,160.7 crore (up 20.5 per cent Y-o-Y).
 
YES Securities
 
YES Securities expects a 2.6 per cent Q-o-Q drop in overall volumes (+7.4 per cent Y-o-Y), with tractor volumes down 23.1 per cent Q-o-Q (+3.7 per cent Y-o-Y). Tractor contributions in total volumes decreased to 28.8 per cent (from 36.5 per cent in Q1FY25), while UV contributions rose to 61.1per cent (from 55.5 per cent in Q1FY25). 
 
They expect M&M’s revenue to grow 13.2 per cent Y-o-Y (+1.8 per cent Q-o-Q) to Rs  27,530 crore, with an ASP of Rs  848.5k/unit (up 5.5 per cent Y-o-Y and 4.5 per cent Q-o-Q). Ebitda margins are expected at 14.1 per cent (+150 bps Y-o-Y, -80 bps Q-o-Q), with adjusted PAT flat Y-o-Y (+33.4 per cent Q-o-Q) at Rs 3,490 crore.

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First Published: Nov 05 2024 | 9:32 AM IST

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