Mahindra & Mahindra reports rise of 154.88% in Net Profit, beats estimates

M&M Q3 Results
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Net profit increase - Mahindra and Mahindra reported a standalone net profit of Rs 1,353.07 crore, a rise of 154.88% over the same period last year. In the year-ago period, it reported a net profit of Rs 530.86 crore. The net profit is above street estimates of Rs 1,202.4 crore.

The consolidated third-quarter profit for M&M for the December quarter increased by 57% and stood at Rs 1,987 crore. In Q3FY21, the consolidated net profit was Rs 1,268 crore.

Revenue rise - The revenue from operation for the December quarter stood at Rs 15,238.92 crore, a growth of 8.41%. In the year-ago period, the revenue was Rs 14,056.54 crore. Analysts have earlier estimated revenue of Rs 15,326 crore.

Consolidated revenue for Q3FY22 was Rs 15,239 crore from Rs 14,057 crore, up by 8% YoY.

EBITDA and margins - EBITDA for Q3FY22 was down 24% and stood at Rs 1,806 crore. EBIDTA for Q3FY21 was Rs 2,386 crore. Margins declined to 11.99% in the December quarter. The margins were 17% in the Q3FY21 and 12.5% in the September quarter. The margins declined because of commodity inflation and the shortage of semiconductors.

Sales numbers - The sales declined marginally YoY. During the December quarter, M&M sold 1,18,174 vehicles and 91,769 tractors, down 2% and 9%, respectively.

Update from Automotive - The company has a healthy booking pipeline and buoyant demand for the company's products. It has 1,55,000 plus opening bookings out of which 70,000 plus are for XUV700. The company registered the highest ever quarterly sales of Treo Auto and Treo Zor in the EV 3-wheeler segment.

Farm Equipment updates - Farm Business delivered an excellent performance with second-highest Q3 in terms of PBIT and domestic volumes. They saw a healthy growth of 1.4% in Q3FY22.

Review

M&M has reported an excellent set of numbers for the Q3 beating analysts' expectations both in the topline and bottomline. The concern for the company would be lower margins. The margins have dropped both sequentially and YoY. The company has strong booking numbers and strong demand for its products.

ICICI Securities has a BUY call on Mahindra & Mahindra with a target price of Rs 959. The time period for the target is one year.

The share price closed 1.5% higher at Rs 852 per share on Thursday.

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