The results for M&M include the combined results of Mahindra and Mahindra Limited (M&M) and Mahindra Vehicle Manufacturers Limited (MVML), which is a 100% subsidiary of M&M. Results for the combined entity missed estimates at revenue and EBITDA level and surpassed estimates at PAT level in Q3FY19, owing to lower tax.
Revenues for M&M + MVML were 12% yoy higher (1% qoq higher) at Rs12,893cr, lower than expectation of Rs13,089cr. EBITDA was flat yoy (8% qoq lower) at Rs1,703cr, significantly below expectation of Rs1,918cr. At 13.2%, EBITDA margin was the lowest since Q1FY18, due to lower operating leverage and higher commodity costs. PAT (before EO) surged 60% yoy (down 10% qoq) to Rs1,476cr and surpassed expectation of Rs1,056cr. Considering the exceptional item (expense), PAT came in at Rs1,396cr, up 7% yoy (down 22% qoq).
The company reported an exceptional item (expense) of Rs80cr in Q3FY19 as provision for impairment of certain investments.
Total tax was significantly lower at Rs29cr due to write-back of tax provision of Rs192cr with respect to earlier periods.
Within individual segments, automotive segment revenue was up 11% yoy, which included weak volume growth in segments such as PV (up 1% yoy) and M&HCV (down 22% yoy). Revenue for the farm equipment segment, comprising of tractors, grew at a faster pace of 13% yoy.
Lower volumes and high level of discounting, coupled with input cost pressures, led to EBIT margin for the automotive segment plunging to less than 6% in Q3FY19 (5.8%), a multi-quarter low. Tractor segment margins continued to stay healthy at 19%.
According to the company, M&HCV volumes were affected by axle load norms, which have created surplus capacity in the system, and weakened demand temporarily. PV demand suffered due to weak festive offtake, especially from urban areas. However, tractor demand is expected to stay robust, due to positive rural sentiment, driven by three consecutive years of an almost normal monsoon, five consecutive good harvests, continued government focus on agricultural & rural development and sustained investment in infrastructure and road projects.
Mahindra & Mahindra Ltd is currently trading at Rs. 685, down by 16.55 points or 2.36% from its previous closing of Rs. 701.55 on the BSE.
The scrip opened at Rs. 702 and has touched a high and low of Rs. 706 and Rs. 680.50 respectively. So far 96,74,717 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.
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