Mahindra & Mahindra (M&M) on Tuesday reported a 67% year-on-year rise in consolidated net profits at Rs 1,257 crore for the three months to June, driven by a smart increase in revenues. It may be recalled that Q1FY18 was the pre-GST quarter during which companies stayed light on inventories. The company’s revenue rose 23% year-on-year to Rs 13,358 crore, driven by increase in volumes of 5.6% year-on-year in SUVs and a smart 19% year-on-year jump in the volumes of tractors.
Profitability at the automaker improved during Q1FY19; Ebitda (earnings before interest, tax, depreciation and amortisation) margins expanded by 260 basis points year-on-year to 15.8% thanks to better margins posted by the tractors business. Pawan Goenka, managing director, M&M, said, while industry had faced some problems such as elevated commodity prices and high interest rates, so far these had been manageable.
“We have been able to manage commodity prices so far and up to 50 basis points increase in interest rates should not cause concern for the industry and that is where we are right now,” Goenka said. For 2018- 2019, the management has guided for a 10% growth in passenger vehicles, an 8-10% growth in tractors. It is planning three new launches in the UV space and several products in the ICV range, called Furio, which, it believes, will help expand operating margins.
M&M’s heavy commercial vehicle (HCV) volumes grew 123% year-on-year and the company exported 9,360 vehicles during the quarter. In the March quarter, exports had suffered due to uneconomical policies in Sri Lanka and Nepal.
