Q1FY24 Preview: Mahindra and Mahindra: Revenue seen at Rs. 242,178 million, PAT at Rs. 20,778 million

3 Aug 2023 , 10:44 AM

Result date: 4^th 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:

• Demand trends across urban and rural markets
• Outlook on pricing, input costs and margins

	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