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Company Report

Mahindra & Mahindra

The automotive segment has once again powered Mahindra & Mahindraís first quarter performance. The real growth has come from a huge rise in other income. However, sequentially its performance has not been particularly interesting. Total income for the quarter at Rs 1,013.78 crore (Rs 831.49 crore) was up 22 per cent up but sequentially it was down 11 per cent from the March quarter income of Rs 1,142.48 crore. Total expenditure, on the other hand, was up 17 per cent from the corresponding previous quarter at Rs 966.58 crore (Rs 823.69 crore).

Net profit in the first quarter was up 505 per cent at Rs 47.19 crore (Rs 7.80 crore). However, it was down 15 per cent from the preceding quarter. Income from operations was up 20 per cent at Rs 992.89 crore (Rs 828.43 crore).

With bad monsoon last year, Mahindraís farm equipment segment has suffered and its real growth during the current quarter has been the result of a good show in the automotive segment.

Sale from the automotive segment was up 58 per cent year-on-year but down 14 per cent sequentially, while the farm equipment sale was down 28 per cent YoY and 2 per cent sequentially.

Though revenue growth was not very impressive, a control over operational cost has improved in margins. Operating profit was up 20 per cent over the corresponding previous quarter at Rs 89.89 crore (Rs 74.93 crore), while sequentially it was up 4 per cent from the March quarter profit of Rs 86.58 crore.

Other income leaped by a huge 583 per cent YoY to Rs 20.88 crore (Rs 3.06 crore). As a consequence profit before tax improved tremendously. This in turn led to a 22 per cent rise in tax provision to Rs 5.80 crore (Rs 4.75 crore) YoY. The company had written back taxes of Rs 14.15 crore in the March quarter.

After having made a prior period adjustment of Rs 4.70 crore net profit was up by a good 445 per cent year-on-year, while it went down 13 per cent sequentially. Almost all of M&Mís profit has come from the automotive segment, while the farm equipment segmentís contribution has been minimal.

The stock has seen a good rise in the current bull phase of the market and currently trading at Rs 185 discounts its June quarter annualised EPS of Rs 16.27 by 11 times.

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