Result date: 11th November, 2022
Recommendation: Buy
Target price: Rs1,350
Mahindra & Mahindra (M&M) witnessed surge in auto volume growth (over the year-ago quarter) to 77%, partly due to a low base effect. Sequentially, auto volumes increased 17%. M&M’s tractor volumes inched up 5% over the year-ago quarter, but declined 21% sequentially (partly due to the seasonality factor). Overall, revenue could grow 58% over the year-ago quarter. Share of tractors in total revenue could come down from 34% in Q1FY23 to 26% in Q2FY23.
Fall in commodity prices, price hikes and operating leverage are key margin tailwinds while adverse revenue mix and introductory pricing of Scorpio are key headwinds. Analysts at IIFL Securities estimate M&M’s Auto EBIT margin at 7.1% and Tractor EBIT margin at 16.0%.
The company’s Profit After Tax or PAT could grow 38% over the year-ago quarter.
Important management insights to watch out for:
-
Demand trends across key markets
-
Demand for tractors during the festive season and H2FY23
-
Outlook on input costs, pricing action, margins
Including MVML
|
|
September 2022 estimates |
QoQ change |
YoY change |
|
Auto volumes |
179,683 |
17.1% |
76.7% |
|
Tractor volumes |
93,540 |
(21.1)% |
5.2% |
|
Revenue (Rs mn) |
210,161 |
7.2% |
58.0% |
|
EBITDA (Rs mn) |
25,488 |
8.9% |
53.6% |
|
EBITDA margin |
12.1% |
19 bps |
(35) bps |
|
Profit After Tax (Rs mn) |
23,237 |
58.0% |
37.8% |
Source: IIFL Research
