Q1FY23 Preview: Mahindra and Mahindra: Revenue seen at Rs194,540 million, PAT at Rs15,093 million

4 Aug 2022 , 12:19 PM

Result date: 5^th August, 2022
Recommendation: Buy
Target price: Rs1,345

Mahindra and Mahindra (M&M) will report its performance for the June 2022 quarter on August 5. The company witnessed strong growth in tractor volumes both over the year-ago quarter (partly aided by base effect) and sequentially (seasonal factors). Auto volumes grew 77% year-on-year amid a favorable base, but declined 2% sequentially. Overall revenue could grow ~19% over the year ago quarter with a higher share of tractors (~35%).

EBITDA margin is pegged at 13.4% versus 13.9% in the year-ago quarter and 11.4% sequentially. Pressure of rising input cost inflation could be offset by price hikes, operating leverage and favorable revenue mix. EBIT margin of auto segment is estimated at 5.8% and of Tractor segment is seen at 18.5%.

Profit After Tax (PAT) could grow 61.6% over the year-ago quarter.

Important management insights to watch out for:

• Demand trends across rural and urban markets
• Commentary on availability of chips
• Outlook on input costs, pricing action and margins

(Including MVML)	June 2022 estimates	YoY change	QoQ change
Auto volumes	153,462	76.7%	(1.6)%
Tractor volumes	118,509	18.6%	62.6%
Revenue (Rs mn)	194,540	65.4%	13.6%
EBITDA (Rs mn)	26,041	59.6%	33.9%
Profit After Tax (Rs mn)	15,093	61.6%	29.3%

Source: IIFL Research