Q3FY23 Preview: Mahindra and Mahindra: Revenue seen at Rs 214,609 million, PAT at Rs 19,148 million

7 Feb 2023 , 04:31 PM

Result date: 10^th February, 2023

Recommendation: Buy 

Target price: Rs 1,450

Mahindra and Mahindra (M&M) witnessed 45% growth in auto sales volumes over the year-ago quarter. Sequentially though this metric fell 2%. Tractor volumes on the other hand grew 14% over the year-ago quarter and 13% sequentially. Analysts at IIFL Capital Services expect revenue share of tractors to be up from 27% in Q2 to 29% in Q3. They expect revenue to grow around 41% over the year-ago quarter.

EBITDA margin could increase 67 basis points over the year-ago quarter and 53 basis points sequentially to 12.5%. Key sequential margin tailwinds include lower commodity prices, price hikes and higher tractor mix. Prominent sequential margin headwinds introductory pricing of Scorpio N. Analysts at IIFL Capital Services expect Auto EBIT margin of 6.1% and Tractor EBIT margin at 17.5%.

Profit After Tax (PAT) is estimated to grow around 42% over the year-ago quarter.

Important management insights to watch out for:

• Demand trends across markets, segments
• Margin drivers going forward

	December 2022 estimates	YoY change	QoQ change
Auto Volumes	176,094	45.3%	(2.0)%
Tractor Volumes	105,765	13.8%	13.1%
Revenue (Rs mn)	214,609	40.8%	3.0%
EBITDA (Rs mn)	26,849	48.8%	7.6%
EBITDA margin	12.5%	67 bps	53 bps
Profit After Tax (Rs mn)	19,148	41.5%	(18.1)%

Source: IIFL Research