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M&M declines after Q3 earnings

Capital Market/ 15:01 , Feb 08, 2013

Mahindra & Mahindra fell 1.36% to Rs 883.25 at 15:06 IST on BSE even as the combined net profit of the company and its 100% subsidiary, Mahindra Vehicles Manufacturers, jumped in Q3 December 2012 over Q3 December 2011.

The result was announced during trading hours today, 8 February 2013.

Meanwhile, the BSE Sensex was down 25.08 points, or 0.13%, to 19,555.24.

On BSE, 2.54 lakh shares were traded in the counter as against an average daily volume of 92,215 shares in the past one quarter.

The stock hit a high of Rs 906.70 and a low of Rs 875.55 so far during the day. The stock had hit a record high of Rs 974.80 on 10 January 2013. The stock had hit a 52-week low of Rs 621.75 on 18 May 2012.

The stock had underperformed the market over the past one month till 7 February 2013, falling 5.80% compared with the Sensex's 0.56% fall. The scrip had also underperformed the market in past one quarter, falling 2.36% as against Sensex's 3.59% rise.

The large-cap company has an equity capital of Rs 306.99 crore. Face value per share is Rs 5.

The combined net profit of Mahindra & Mahindra (M&M) and its 100% subsidiary -- Mahindra Vehicle Manufacturers (MVML) -- jumped 29.6% to Rs 915 crore on 27.5% growth in gross revenue plus other income to Rs 11522.30 crore in Q3 December 2012 over Q3 December 2011. The operating margin for the combined entity was reported at 13.5% in Q3 December 2012.

M&M said the growth in profits, despite the relentless increase in material costs, was due to a good volume performance by automotive sector and tight control on expenses.

MVML, located in Chakan near Pune, was set up as a 100% subsidiary of the company with a view to sourcing contemporary products for expanding the market offerings of the company. Hence it is a critical part of its business and only combined results of the company and MVML can provide a comprehensive view of company's performance.

In the passenger utility vehicle (UV) segment, the company sold 70483 vehicles in Q3 December 2012 - a growth of 36% over Q3 December 2011. All the products of the company's UV portfolio continued to do well. The company also expanded its UV portfolio with the launch of Ssangyong Rexton, which is positioned as a premium SUV. Rexton has received an enthusiastic response from the market. The company continued its leadership position with a market share of 47.9%. In the cars segment, the company sold 3814 Verito cars. The company also exported 6500 vehicles in Q3 December 2012 .

The domestic tractor industry registered a moderate growth in Q3 December 2012 with sales growing by 3.9% over Q3 December 2011. In Q3 December 2012, the company sold 62522 tractors under the Mahindra and Swaraj brands as against 62342 tractors sold in the same period last year. The company's market sharrer during the quarter was 41.5%. The company exported 2459 tractors in Q3 December 2012. The engine business revenue grew by 11% to Rs 222.10 crore in Q3 December 2012 against Rs 200.10 crore Q3 December 2011.

M&M said there has been a significant improvement in the macroeconomic environment in the last three months. Global risks to growth have abated for now, bringing considerable relief. Macroeconomic developments on the domestic front have also been equally encouraging. In particular, the last quarter saw a steady decline in inflation, while industrial volumes, after virtually zero growth in the first two quarters of fiscal year ending March 2013, registered a growth of 4% year-on-year in October-November 2012. Furthermore, the Government of India has swung back into action in the last quarter, announcing a string of significant and much-needed policy and regulatory reforms, which have helped bolster business and investor confidence in the country. Consequently even though several weaknesses like our high fiscal and current account deficits and subdued investment cycle remain, our current overall outlook on the economy is one of cautious optimism, the company said in a statement.

The Mahindra Group operates in the key industries that drive economic growth, enjoying a leadership position in tractors, utility vehicles, information technology and vacation ownership. In addition, Mahindra enjoys a strong presence in the agribusiness, aerospace, components, consulting services, defence, energy, financial services, industrial equipment, logistics, real estate, retail, steel and two wheeler industries.


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