Mahindra & Mahindra reported robust growth of 61% year-on-year in its standalone net profit for the December quarter, despite a decline in its operating profit margin. The increase in profit was driven by a low base in the corresponding period of the previous year, which had a one-time impairment charge. However, margins contracted due to reduced tractor volumes and higher expenses.
The company’s standalone net profit for the quarter stood at Rs 2,453.98 crore, compared to Rs 1,528.06 crore in the same period last year. In the third quarter of the previous year, M&M recorded a one-time impairment provision of Rs 629 crore, resulting from a reassessment of the truck and bus division.
Revenue from operations climbed 16% year-on-year to Rs 25,642.36 crore, primarily due to higher prices. Total vehicle volume increased by 20% year-on-year to 211,443 units. However, this figure includes 27,198 units sold by a separate entity, MLMML (Mahindra Last Mile Mobility Ltd), which was demerged in September last year. The revenue in standalone results excludes the realization from these volumes, the company clarified.
Meanwhile, tractor sales declined by 4% to 100,522 units during the quarter. The contraction in the tractor industry was attributed to the high base of the previous year, unpredictable weather conditions, and lower reservoir levels, according to M&M’s Executive Director and CEO for the Auto and Farm sector, Rajesh Jejurikar. The tractor and farm equipment business is more profitable for M&M compared to its auto business.
In terms of profitability, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 10% to Rs 3,590 crore. However, the EBITDA margin for the quarter decreased to 14% from 14.8% in the previous year, as the revenue growth couldn’t fully offset the impact of higher expenses during the quarter.
Total expenses during the quarter rose by 16% year-on-year to Rs 22,904.78 crore, driven by increased costs of materials and employee benefits. The cost of materials consumed rose by 20% to Rs 17,803 crore. Additionally, the cost of materials consumed as a percentage of revenue from operations also increased to 69.4% from 66.9% in the previous year.
For the nine months ending on December 31, M&M’s standalone net profit increased to Rs 8,679.59 crore from Rs 4,999.67 crore, while revenue from operations rose to Rs 75,783.37 crore from Rs 64,030.84 crore.
