Strong sales lift Mahindra & Mahindra net profit 8%

Mahindra & Mahindra, India’s largest utility vehicles maker, on Monday reported a better-than-expected 8% rise in quarterly net profit, driven by strong volume and demand growth. Mahindra, whose core business also includes tractors, said its business outlook for the year remained positive but watchful.   

Carmakers in India are seeing a drop in demand amid surging interest rates and fuel prices in the world’s second-fastest growing auto market after China. Mahindra’s sales in July beat industry averages, rising an annual 41%.

“With headline inflation ranging above 9% for much of the past year, the RBI has tightened its policy stance aggressively in recent months leading to a sharp rise in loan rates with inevitable adverse impacts on domestic demand and industrial growth,” Mahindra said in a statement.

Indian car sales, which grew at a breakneck 30% in the fiscal year that ended in March, are now expected to grow by just 10-12% this fiscal year, down from an earlier forecast of 16-18%, the Society of Indian Automobile Manufacturers said last month.

Mahindra reported net profit of `605 crore ($135 million) for its fiscal first quarter ended June, compared with `560 crore a year ago. Net sales rose 30% to `667 crore. Analysts, on average, expected net profit of `590 crore, according to a Reuters poll of brokerages.  Reuters