Q2FY23 Preview: Mahindra -; Mahindra: Revenue seen at Rs210,161 million, PAT at Rs23,237 million

10 Nov 2022 , 10:50 AM

Result date: 11^th 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 Capital Services 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