Mahindra & Mahindra Q3 profit climbs 14% to Rs 1,528 crore

New Delhi: Mahindra & Mahindra (M&M) on Friday reported a 14 per cent rise in its profit after tax to Rs 1,528 crore for the third quarter ended December 2022, driven by robust sales across automobile and farm segments.

The Mumbai-based automaker had reported a net profit of Rs 1,335 crore for the October-December period of the previous fiscal.

Its revenue surged 41 per cent to Rs 21,654 crore for the third quarter compared to Rs 15,349 crore in the year-ago period.

The company said it has sold a total of 1,76,094 vehicles during the period under review, up 45 per cent from 1,21,167 units a year ago.

Tractor sales rose 14 per cent to 1,04,850 units in the third quarter against 91,769 units in the same quarter of the last fiscal.

"We have had another robust quarter led by the robust performance of our auto division. Our farm division also reported healthy growth with increased market share. Our capital allocation actions are continuing to show results and we remain committed to our journey of growth and returns," M&M Managing Director & CEO Anish Shah said.

M&M Executive Director Rajesh Jejurikar noted that the company's efforts towards creating segment-leading products and improving operational efficiencies have led to the achievement of the highest-ever quarterly revenue and PBIT (profit before interest and tax) in the third quarter for the auto and farm sectors.

"In SUVs, we continue to be leaders in revenue market share for the fourth consecutive quarter and have celebrated another successful launch of the XUV4OO. In the tractor business, we have achieved 41 per cent market share, the highest Q3 market share in the last 5 years," he added.

In a press briefing, Jejurikar said that the company is still witnessing supply disruptions which have been impacting production activities and stretching waiting periods for many models.

"So while capacities are available, we will not fully be able to convert those (due to the supply issues)," he said when asked about the chip shortage and the company's ever growing list of pending orders.

Jejurikar stated that the company's production capacity enhancement plans are on track for the SUVs.

"We had said it will be at the 39,000 unit mark per month by March of this year. We have completed that process already," he said, adding that the company is on track to expand the capacity to 49,000 units a month one year from now.

"That plan still remains intact...every launch that we are doing is hitting a sweet spot with consumers, the latest being the rear wheel drive Thar and the XUV400 as well," Jejurikar said.

He noted that the company is unhappy with the long waiting periods and is trying everything to reduce the time frame for actual deliveries.

Answering a query, Jejurikar said that the company expects prices to go up in the range of Rs 12,000 to Rs 20,000 with the upgradation of its model range to conform to the second phase of the stricter BS-VI emission norms which will kick-in from April 1 this year.

The company has already started taking price hikes in a phased manner across its portfolio, he said.

When asked about the business outlook amid various challenges like rising interest rates and global recession, Shah noted: "We are actually positioned very well today, because of the products we have. The headwinds are real and they will impact the industry but with the kind of pipeline, we have the products, we have the 2.66 lakh unit booking backlog, these are things that actually position us extremely well for any potential headwinds that could come up." Further, he said the government has taken a number of actions which have been pre-emptive like the increase in interest rates.

"It was done fairly early and I think it has helped the economy. Further actions in terms of focus on capex now as you saw in the recent budget, I think will help going forward as well," Shah said.

He noted that demand across sectors continues to be strong.

"So we're seeing a reasonably buoyant industry. So reasonably because there are some pockets where we are seeing weaknesses, and those tend to be in certain income segments. And therefore inclusive growth is an important part which is also packed within the Budget right now," Shah said.

He said: "We will likely see some impact from a global recession. We're not going to be immune to that. Inflation is not going away as yet. I think India is better positioned for inflation. And therefore, there are multiple risks at this point in time. But India will be positioned better than the rest of the world. And therefore, we will see a lower impact in India." On a consolidated basis, the Mahindra Group's net profit grew 34 per cent to Rs 2,677 crore from Rs 1,987 crore in the same period last year.

Its revenue rose to Rs 30,620 crore in the third quarter from Rs 23,594 crore in the same period of the last financial year.

Shares of M&M were trading 0.54 per cent down at Rs 1,365.2 per scrip on the BSE.