3 Aug 2023 , 10:44 AM
Result date: 4th August, 2023
Recommendation: Add
Target price: Rs. 1,375
Mahindra and Mahindra (M&M) witnessed 21% growth in its auto volumes over the year-ago quarter and a 2% sequential decline in this metric. Tractor volumes were down 3% over the year-ago quarter, but grew 28% sequentially (owing to the seasonality factor). Analysts at IIFL Capital Services expect revenue share of Tractors to be up from 25% in March 2023 quarter to 30% in the June 2023 quarter. The company’s revenue could grow 22.8% over the year-ago quarter and 7.3% sequentially.
Prominent margin tailwinds (sequentially) during the quarter include favorable operating leverage; price hikes and higher tractor mix. Analysts at IIFL Capital Services expect the company’s Auto EBIT margin at 7.5% and Tractor EBIT margin at 18.0%. Overall, the company’s EBITDA margin is seen at 13.5%, up 167 basis points over the year-ago quarter and 111 basis points sequentially.
M&M’s Profit After Tax or PAT could grow 43.8% over the year-ago quarter and inch up 0.8% sequentially.
Important management insights to watch out for:
June 2023 estimates |
YoY change |
QoQ change |
|
Auto volumes |
186,138 |
21.3% |
(1.6)% |
Tractor volumes |
115,009 |
(3.0)% |
28.2% |
Revenue |
242,178 |
22.8% |
7.3% |
EBITDA |
32,701 |
40.1% |
16.9% |
EBITDA margin (%) |
13.5% |
167 bps |
111 bps |
Profit After Tax |
20,778 |
43.8% |
0.8% |
Source: IIFL Research
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