Tractors save the day for Mahindra & Mahindra in Q2

Mahindra & Mahindra (M&M) reported a 9.7% year-on-year growth in standalone net profit in July-September quarter at `989.5 crore, largely driven by the strong tractor sales and higher demand in the rural region.

Operating profit margins for M&M (standalone) expanded 142 basis points yoy to 12.8%, driven by price hikes and lower raw material costs.

Despite continuing slowdown in passenger vehicles, the company gained on strong recovery of tractor sales and rural purchases on the back of good monsoon.

“The growth remains weak across all segments of the industry. The only silver lining is agri growth and M&M has done reasonably good with tractors attaining traction and maintaining good run in the festive season,” company’s chief financial officer V S Parthasarathy told analysts in an earnings call.

M&M’s domestic sales stood at 57,549 tractors reporting a growth of 22.3% over the same period last year. Its domestic passenger vehicle sales continued to remain weak on account of the slowdown in the market and slowing demand for UVs. It sold 50,267 units of passenger vehicles during the quarter as against 67,650 units in the same quarter last year.

“The results were driven by a robust growth in the farm equipment segment even though the automotive segment posted a sharp decline in performance,” said Yaresh Kothari, analyst, Angel Broking.