Mahindra & Mahindra Q4 profit jumps 14.4% on better UV, tractor sales

Mahindra & Mahindra on Monday reported a 14.4% rise in consolidated net profit at Rs 668 crore for the quarter to March driven by better margin and higher sales and sounded bullish about tractor sales.

The auto maker was, however, cautious on passenger cars given the gathering cloud on the diesel vehicles front.

Consolidated total income for the quarter rose 16% to Rs 11,669 crore, while operating margins rose 130 basis points to 12.5% despite the withdrawal of tax sops for its Haridwar plant.

For the full year ended March 2016, total income inched up a tad over 7% to Rs 43,918 crore, while net profit declined to Rs 3,298 crore, from Rs 3,423 crore in 2014-15.

While passenger vehicle sales as a whole grew 2.5% lead by a 15.2% rise in sales of utility vehicles on back of new launches and urban demand in the reporting quarter, Mahindra reported its best-ever sales in 16 quarters during the reporting period with its utility vehicles sales rising 14% and tractor volume jumping 12%, leading to an over 13% spike in revenue.

During the year, the company rolled out nine models, including two brand new models-the KUV100 and the TUV300 and company chief executive Praveen Shah ruled out any major launches in FY2017 except some variant launches.

Better sales numbers for the full year is despite an 8.8% fall in sales of passenger car segment and 6.8% in tractor sales during the first half of the year, company's group chief financial officer VS Parathasarathy said, adding the company ended the year yanking up more market share in both the categories-41% in trackers and 39.2% in utility vehicles.

Going forward, we expect to clock 10% growth in the tractor sales, given the positive monsoon forecast, while given the widening ban on the highend high endvehicles, we don't see any reason to revise the industry growth estimate, as the issue is a matter of grave concern for the industry, group executive director and president Pawan Goenka told reporters here while announcing the earnings for the quarter and the full year 2015-16. 

On the widening ambit of the ban on high-end diesel vehicles, Goenka said, going by what the Supreme Court has said at the last hearing, the industry does not expect a sweeping ban. "We hope the apex court come up with a lasting solution to the issue."

On the tractor business, its farm equipment head Rajesh Jejurikar said after five consecutive quarters of de-growth the tractor industry witnessed a growth of 7.9% in the March quarter, helping it boost its market share to 41%.

This was primarily due to a marginally higher Rabi output and lower industry base. Going ahead a good monsoon will be a key enabler in reviving the demand for tractors. The IMD and Skymet forecasts are above normal monsoon which bodes well for the industry.

On the struggling truck and bus business, Goenka said medium heavy vehicles segment continues to grow on back of replacement demand, improvement in industrial activity and movement in infrastructure projects, but the rural demand has been sluggish in the March quarter.

Jejurikar said the company continued its leadership position in the pick-up (2-3.5 T) segment with a 66.6% market share and continued to be the largest player in the small commercial vehicles (3.5 T) segment with a market share of 49%.

The board recommended a final 240 per cent dividend or Rs 12 per share which will see an outgo of Rs 841.7 crore.

M&M Group consolidated income for the full year rose 10% Rs 83,207 crore, while consolidated profit after tax inched up to Rs 3,211 crore from Rs 3,137 crore.

During the year, group companies like Tech Mahindra and Mahindra Holidays improved performance. While hospitality arm Mahindra Holidays reported a 19% revenue growth and net income of growth of 49%, TechM's revenue grew 17% and net income 19%.

The Mahindra counter ended 0.6% down at Rs 1,327.50 on the BSE whose benchmark Sensex continued its upward journey for the fifth continuous trading day gaining 0.30%.