M&M Q4 results analysis: Revenue, Profit, Margins, Dividend and more
Last updated: 01 Jun, 2021 | 04:10 am
Profit misses estimates: M&M has reported a 69% drop in net profit to Rs 163 crore in Jan-Mar 21 period, missing street estimates. Analysts had earlier anticipated a net profit of about 1,094 crore. The bottomline was hit due a one-time loss on impairment of assets.
Revenue rises: M&M’s revenues fell 5% on-quarter to ₹13,338 crore, largely in-line with street estimates.
Supply chain issues drag sales: The company continues to grapple with supply-side issues. Shortage of semiconductors impacted availability of Electric Control Units (ECUs), due to a high dependence on one supplier. The overall sales were down 11% from Q3 to 1.08 lakh units. Sales of its passenger cars rose 0.54% QoQ to 52,725 units in the fourth quarter. Its tractors and three-wheeler productions remained unaffected due to this shortage.
Uncertainty over subsidiary's sale: M&M’s subsidiary SsangYong had filed for bankruptcy in South Korea. M&M is reportedly in discussions with an investor for selling a majority stake in Ssangyong. M&M in September last year said it has decided not to invest any more money into SsangYong after it failed to turn it around even after 10 long years of acquisition, and is looking to divest its stake to below 50%.
Future outlook: M&M is confident that demand will rebound by the end of July. Tractor demand is likely to rebound faster (by June), while auto sector demand is likely to come back by July. However, concerns remain around semiconductor shortage, localised lockdowns and commodity price increase.
The company noted that supply side pressures and higher input prices have put pressure on its margins, thus affecting the bottomline. M&M is carefully reviewing the demand and supply situation and re-calibrating its operations accordingly. The company has guided for delivering a 18% Return on Equity and 15- 20% EPS growth by FY25.