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M&M Q1 results update!

M&M Q1 results update!

Last updated: 07 Aug, 2020 | 11:09 am

M&M Q1 results update!

  • Profit down 97%, below estimates: M&M’s net profit fell 97% on-year to Rs 68 crore in Q1FY21, on the back of disruption is sales caused by the lockdowns. Analysts had earlier anticipated a net profit of about Rs 200 crore. 
  • Revenues plunge: M&M’s revenues plunged 56% on-year to ₹5,589 crore. M&M said that low pipeline inventory coupled with the challenges of ramping up production due to supply chain issues affected the company's sales. 
  • Tractor sales seeing strong recovery: While passenger vehicles have taken a hit, tractor sales have recovered sharply. 'The timely relaxation of the lockdown for the agricultural sector along with positive rural sentiment led to good sales numbers for tractors during the quarter (down 22% from last year).'

Automakers (except two-wheelers) are one of the worst-hit in this pandemic. In Q1 F2021, the Indian auto industry (excluding two-wheelers) reported a de-growth of 81.5% over the previous year.  A combination of lower incomes and heightened uncertainty is expected to drag consumer spending, consequently hurting recovery in auto sales.  However, M&M is hopeful with respect to rural demand due to government schemes and a good monsoon.

Consensus recommendation: Hold ( Based on views from 40 analysts from external research institutions)

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