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Tractors drive M&M net up 29%, SUV sales slow

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Higher growth in tractor sales led to a 29.3% on-year growth in first quarter (Q1, April-June) net profit at Rs 937.9 crore for Mahindra & Mahindra, the country’s biggest tractor and utility vehicle maker.

The company’s tractor sales grew 26.1% with a market share of 41.1%.

“Tractor growth continues to remain very robust and better than that we had anticipated.
We expect a double-digit growth in the overall tractor industry sales for this fiscal,” said Pawan Goenka, president – automotive and farm equipment sectors, M&M. “Of the budget that we had made, we would certainly go beyond our plans in tractors and certainly be below our plans in automotive.”

However, there are no clear signs of revival in the automotive space, it said.

“Last year, SUVs (sports utility vehicles) and pick-ups were the highest-growing segments. However, the demand for SUVs slowed down partly because of higher taxes leading to higher prices, rising fuel prices and the overall slowdown in the economy. The SUV segment de-grew for the first time in four years,” said Goenka.

Operating profit or Ebitda margin expanded 100 basis points on-year to 12.8%, led by softening of commodity prices and due to greater share of tractors in the product-mix.

“It’s a mixed bad really. Topline at Rs 10,023 crore was slightly lower than our expectations, on account of a 3.7% on-quarter decline in net average realisation. However, the bottomline at Rs 938 crore was ahead of our estimates. Overall, the June quarter results were driven by an impressive performance by the tractor segment, following strong growth in volumes,said Yaresh Kothari, analyst with Angel Broking.

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