M&M Q1 Results: Strong volumes aid 23% revenue growth; Stock rises despite margin contraction

Mahindra & Mahindra Ltd., (M&M), the automotive and tractor giant, reported results for the June quarter on Thursday, July 30, which were mostly in-line with analyst expectations. The stock has jumped over 3% in response to the numbers.

Revenue for the June quarter stood at ₹41,920 crore, implying a growth of 23% from last year's figure of ₹34,083 crore. The figure was slightly higher compared the CNBC-TV18's poll estimate of ₹41,764 crore.

M&M's revenue on a standalone basis was aided by a 21% volume growth in the April-June period on a year-on-year basis. Automotive volumes during the quarter were up 23% from last year. However, both overall and automotive volumes were down 7% and 2% respectively on a sequentially.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) during the quarter stood at ₹5,150 crore, 4.6% higher compared to last year's figure of ₹4,882 crore. A CNBC-TV18 poll was working with a figure of ₹5,281 crore.

EBITDA margin for the quarter stood at 12.2%, a contraction of 210 basis points from last year's quarterly margin of 14.3%. The figure is also marginally lower than the CNBC-TV18 poll of 12.6%.

Commodity headwinds and higher mix of electric vehicles turned out to be a drag on M&M's margins during the quarter.

Net profit for the period grew by 6.8% from last year to ₹3,685 crore, which is marginally higher than the CNBC-TV18 poll of ₹3,757 crore.

Realizations for the quarter increased by 1.4% from last year but were lower by 1.5% on a sequential basis.

Here's how M&M's various business segments fared during the quarter:

Automotive business revenue grew by 24% from last year to ₹31,033 crore from ₹24,099 crore last year. However, EBIT margin for the business narrowed to 7.1% from 8.9%. Excluding the eSUV contract manufacturing, margin for this business would come up to 8.3%. Realisations for this business grew by 1%.

Revenue for the tractor business grew by 19% from last year to ₹10,947 crore, while EBIT margin narrowed by 130 basis points to 18.5% from 19.8% in the year-ago period. Core tractor PBIT margin stood at 19.2%. Realisations for this business also grew 1.1% from last year. Market share stood at 44%.

M&M's SUV revenue market share stood at 25%, a growth of 50 basis points from last year. SUV volumes were up 15% during the quarter, while market share for LCVs less than 3.5T grew by 150 basis points sequentially to 52%.

On a consolidated basis, M&M reported 27% revenue growth from last year to ₹57,533 crore, while profit grew by 37% from last year to ₹5,998 crore.

Shares of M&M are currently trading 1.8% higher after the results announcement at ₹3,278. The stock is still down 13% for the year so far.