InvestorQ : How do you see the results of Mahindra and Mahindra for the Sep-20 quarter?
shrinidhi Rajan made post

How do you see the results of Mahindra and Mahindra for the Sep-20 quarter?

6 months ago

Here are the key highlights of the M&M quarterly results for the quarter ended in Sep-20.

· Mahindra & Mahindra, or M&M hereafter, reported 88% fall in Sep-20 quarter profits on a yoy basis due to pressure in the auto mobile segment.

· The net profit for the Sep 20 quarter came in lower at Rs.162 crore as compared to a whopping Rs.1355 crore reported in the Sep-19 quarter. This is far lower than the estimates put out by the consensus estimates of CNBC.

· Revenues for the quarter ended in Sep-20 came at Rs.11,590 crore, up 6% on a yoy basis. The company reported a one-time loss of Rs 1150 crore during the quarter.

· Earnings before interest, tax, depreciation and amortization or EBITDA came in at Rs.2057 crore which was substantially higher than the street estimates by at least 23%. Even the EBITDA margins were nearly 30% higher than estimates at 17.7%.

· The feather in the cap for M&M was the tractor business. Indian tractor industry reported growth of 41.4% which is the highest ever Q2 quarter growth ever, on the back of timely monsoons and a robust Kharif output.

· The tractor demand in the quarter was supported by very timely relaxation of the COVID lockdown restrictions for agricultural sector. In addition, late rains also ensured full reservoirs.

· The sharp increase in minimum support prices or MSP for Kharif crops and important reforms in the agri sector announced by the government also helped to boost tractor demand along the way. That enabled the bounce in M&M numbers.

· In fact, the company expects the tractor demand to remain robust during the upcoming festive season and extend beyond the Rabi cultivation season too.

· If you look at revenues on a consolidated basis, they were slightly lower on a yoy basis at Rs.23,567 crore. Of that the revenues of the automotive segment stood at Rs.11,081 crore, a fall of over 10%.

· The real growth came from the farm equipment segment where the sales stood higher by 20% at Rs.6,478 crore in the second quarter. Financial services revenue contribution was 5% higher at Rs.3019 crore.

The real concern for investors is that the consolidated profit for the Sep-20 quarter came in at less than half at Rs.135cr.