Mahindra & Mahindra
Despite a great effort to diversify revenue streams Mahindra & Mahindra continues to struggle. For the last fiscal total income was up 15 per cent over last year at Rs 3,811.78 crore (Rs 3,320.32 crore). However, the total spending having gone up by 16 per cent over the year-ago period net profit was down 27 per cent.
Income was up 14 per cent at Rs 3,732.12 crore (Rs 3,273.08 crore). The automotive segment has been the main bet for M&M, sales from which were up 37 per cent over last year at Rs 2,511.29 crore (Rs 1,827.55 crore). It has performed well on both fronts, with utility vehicle as well as LCV sales volumes rising by 23 per cent and 27 per cent, respectively.
However, a general sluggishness in agricultural sector, primarily owing to poor monsoons last year, have had an adverse impact on the farm equipment segment with volumes dipping 19 per cent and income down 16 per cent over the year-ago period.
M &Mís operational cost at Rs 3,420.07 crore (Rs 2,999.89 crore) was up 14 per cent from the year-ago period. Rising steel prices saw the raw material cost move up by 21 per cent over the previous year while staff costs and other expenditure was well under control rising by only 3 per cent and 5 per cent respectively. Provision for contingencies was down 19 per cent at Rs 3.87 crore (Rs 4.80 crore). A 14 per cent rise in operational income as well as costs led to the operating profit improvement by an equal percentage to Rs 312.06 crore (Rs 273.20 crore). OPM, however, was stagnant at 8 per cent. Surprisingly, despite rise in volumes, M&Mís OPM has been the same for the past three years.
Other income at Rs 79.66 crore (Rs 47.23 crore) moved up by a good 69 per cent. Interest was up by only 5 per cent at Rs 86.90 crore (Rs 82.67 crore). Depreciation went up 19 per cent to Rs 165.44 crore (Rs 139.38 crore).
In the fourth quarter, M&M reported good top-line growth but lower profits. Net sales was up 24 per cent year-on-year and 17 per cent sequentially at Rs 1,123.05 crore (Rs 909.07 crore). Despite a tax write back of Rs 14.15 crore net profits declined by 35 per cent over the corresponding previous quarter to Rs 55.77 crore (Rs 85.63 crore).
The stock currently trading at Rs 163.50 discounts its last fiscalís EPS of Rs 7.58 by 22 times. Too expensive.