Q2FY24 Preview: Mahindra and Mahindra: Revenue seen at Rs. 248,336 million, PAT at Rs. 31,151 million

6 Nov 2023 , 10:42 AM

Result date: November 10, 2023

Recommendation: Add 

Target price: Rs. 1,525

Mahindra and Mahindra (M&M) witnessed 18% growth in auto volumes over the year-ago quarter (14% growth sequentially). Tractor volumes though were down 4% over the year-ago quarter (weak demand) and 22% sequentially (seasonal). Analysts at IIFL Capital Services expect revenue share of tractors to fall from 31% in the June 2023 quarter to 24% in the September 2023 quarter. Revenue could grow 18%, partly driven by higher realizations.

Key margin tailwinds (sequentially) include fall in costs of precious metals, while key margin headwinds include fall in revenue share of tractors (high margin). Auto EBIT margin is pegged at 8.5% and tractor EBIT margin is estimated at 17.0%.

Profit After Tax or PAT could increase 34.5% over the year-ago quarter and 45.9% sequentially.

Important management insights to watch out for:

• Outlook on tractor demand
• Margin trends, future trajectory

Consolidated	September 2023 estimates	YoY change	QoQ change
Auto volumes	212,078	18.0%	13.9%
Tractor volumes	90,061	(3.7)%	(21.7)%
Revenue (Rs. mn)	248,336	18.2%	3.2%
EBITDA (Rs. mn)	33,340	33.5%	3.1%
EBITDA margin (%)	13.4%	154 bps	(2) bps
Profit After Tax (Rs. mn)	31,151	34.5%	45.9%

Source: IIFL Research