M&M Q1 Results: Consolidated PAT Beats Estimates To Rs 3,508 Crore, Up 60% YoY

Auto major, Mahindra & Mahindra (M&M) beats street estimates by earning a consolidated net profit of Rs 3,508.41 crore (attributable to owners) in the quarter ending June 30, 2023, rising by a whopping 59.79% YoY and 33.06% QoQ. Profitability was driven by operating leverage coupled with capital allocation actions and monetisation. The topline front recorded robust growth as well.

M&M's PAT stood at Rs 2,195.54 crore in the June 2022 quarter and Rs 2,636.67 crore in March 2023 quarter.

Revenue from operations stood at Rs 33,406.44 crore in Q1FY24, as against Rs 28,412.38 crore in Q1 of the previous fiscal, registering a growth of 17.58% YoY. Sequentially, revenue was up by 3.21% from Rs 32,365.60 crore in Q4FY23.

It said Mahindra & Mahindra Limited delivered a stellar Q1 performance with a Net profit of Rs 3,508 cr, up 60%. Operating leverage drove improvement in profits by 2.2x in Auto, 58% in MMFSL and 21% in Farm. This coupled with capital allocation actions and monetisations resulted in a significant step up in Group's profitability.

At the time of writing, M&M shares traded at Rs 1488.05 apiece, up by 1.34% on BSE. The stock traded in the range of Rs 1503 apiece to Rs 1457.35 apiece during the day.

On the financial results, Dr Anish Shah, Managing Director & CEO, of M&M Ltd. said, "During Q1, our businesses across Auto, Farm and Services delivered a strong performance. Auto led the way by strengthening its market leadership position and doubling its operating profit. Farm continues to increase market share quarter on quarter and deliver double-digit profit improvements. In Services, MMFSL is on track to realise its full potential and transformation is underway at TechM. With this momentum, we are well on our way to delivering scale by transforming our core businesses and a 5x challenge for growth gems."

In the automotive segment, M&M reported the highest-ever volume of 186k, up by 21% YoY. Also, it reported the second-highest quarterly volume of 114k in farm equipment.

In regards to the auto and farm sectors, Rajesh Jejurikar, Executive Director & CEO (Auto and Farm Sector), M&M Ltd. said, "Our endeavour to deliver innovative product offerings with strong execution has enabled a strong overall performance. In SUVs, we continue to be leaders in revenue market share for the 6th consecutive quarter with SUV Volume crossing the 1L milestone. In the tractor business, we have achieved 42.9% market share, the highest since Q2 F20. Our E-3W business continued market leadership with 65.5% market share."

On the Q1 earnings, Himanshu Singh - Research Analyst, Prabhudas Lilladher said, "Revenue grew by c23% YoY, helped by volume growth of c11% and came ahead of our and Bloomberg consensus estimates (BBGe). EBITDA margins at 13.4% were higher than our (12.7%) and BBGe (13.2%). Gross margin was slightly higher QoQ 30bps, despite higher share from farm division, but largely in line with expectation. Strong control on other operating expenses aided the EBITDA beat. Higher other income (which included dividends from subsidiaries) and lower interest expenses led to the significant PAT beat."

Accordingly, Singh said, "Overall, standalone numbers are beat on our and street estimates and EBIT margins for both Auto and Farm division have expanded, however, due to change in reporting structure numbers are not comparable."

The Prabhudas Lilladher analyst has recommended 'Buy' on M&M for a target price of Rs 1,685 apiece.

Furthermore, the company's board of directors approved a scheme of merger for absorption of wholly-owned subsidiaries Mahindra Heavy Engines (MHEL), Mahindra Two Wheelers, and Trringo.com. The entire assets and liabilities of MHEL, MTWL and TCL to be transferred to and recorded by the Company at their carrying values.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns. in advises users to consult with certified experts before making any investment decision.