M&M Q4 Profit Jumps 17% on-year, Dividend Declared
Net profit increase: Mahindra and Mahindra reported a standalone net profit of Rs 1,167 crore, a rise of 17% over the same period last year. In the year-ago period, it reported a net profit of Rs 998 crore. The net profit is lower than street estimates of Rs 1,320.50 crore. After accounting for exceptional items, profit rose 427% to Rs 1,292 crore from Rs 245 crore in the same quarter last year.
Revenue rise: The revenue from operation for the March quarter stood at Rs 17,124 crore, a growth of 28%. In the year-ago period, the revenue was Rs 13,356 crore. Analysts have earlier estimated revenue of Rs 16,912 crore. The firm noted that it recorded the highest ever standalone revenue for Auto and Farm Segments at over Rs 55,300 crore for FY22, up 29%.
EBITDA and margins: EBITDA for Q4FY22 was flat YoY and stood at Rs 1946 crore. EBITDA for Q4FY21 was Rs 1,955 crore. Sequentially, EBITDA increased 7.8% from Rs 1,806 crore. Margins declined to 11.4% in the March quarter. The margins were 14.7% in the Q4FY21 and 11.99% in the December quarter. The margins declined because of commodity inflation and the shortage of semiconductors.
Auto Business: M&M auto business delivered the highest ever quarterly UV volumes in Q4 with 42% growth YoY. The semiconductor supplies improved in Q4 resulting in the highest ever quarterly UV volumes. M&M became No.1 in SUV revenue market share in Q4 and in the second half of FY22. With over 1,70,000 bookings, the demand for the automotive product portfolio remains strong.
Farm Business: Farm Equipment Sector (FES) tractors market share for FY22 stood at 40%, a growth of 1.8% YoY.
Dividend: The Board has recommended a dividend of Rs 11.55 per share of the face value of Rs 5 each.
Management commentary: "Our performance in Q4 and FY22 underscores the resilience of our business model. Despite significant challenges due to various factors like Covid, Commodity prices, semiconductor shortages, and the Ukraine conflict, we have delivered strong results at the consolidated level." Anish Shah, Managing Director & CEO.
Global brokerage firm Morgan Stanley sees upside risks to forecasts for tractor volume, a key stock driver for M&M. SUV business turnaround and relatively cheap multiples keep the brokerage to maintain an Overweight stance with a target price of Rs 1145 per share.