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M&M’s Q2 net zooms 44% to ₹2,773 crore, demand momentum is strong, company says

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  • Mahindra & Mahindra reported a 44% year-over-year increase in consolidated net profit to ₹2,773 crore in the second quarter.
  • It sold 1.74 lakh car units in Q2 – 91,800 SUVs and 49,000 pickup trucks.
  • The company’s executive director, Rajesh Jejurikar, said overall demand momentum remains “very strong.”

Mahindra & Mahindra reported a 44% increase in consolidated net profit in the second quarter to 2,773 crore, compared to ₹1,929 crore in the second quarter of FY22.

Total revenue was 29,870 crore during the quarter, up 38.7% from ₹21,470 crore in the same quarter last year, the company said Friday.

This is thanks to healthy volume growth after its SUVs and pickup trucks posted their highest-ever quarterly sales.

M&M’s second quarter car sales were 1.74 lakh units and just under half were SUVs with 91,800 units. It also sold 49,000 pickup trucks.

SUV sales grew 85.6% year-over-year, helping M&M top the category for the third straight quarter, the company said in its results.

M&M reported a 5.2% increase in tractor sales to 92,600 units, year-over-year, but declined sequentially in the second quarter. Market share in this segment remained unchanged year-over-year at 40.1%, but maintained its numero uno position.

“While the auto segment has led the growth, we have seen steady performance across all our group companies,” said Dr. Anish Shah, MD and CEO of M&M.

M&M’s second quarter operating margins were 11.98% in the second quarter of FY23 on a stand-alone basis, up from 12.47% a year ago. It said in September last year that it expects margins in the auto segment to improve by 3% in the medium term.

The company said today that it has already achieved a 2.4% improvement in margins in the second quarter. The margin improvement was aided by the end of introductory pricing for the current flagships, the XUV700 and Thar, and a cost-cutting program.

“We delivered margins faster than we had promised. A year ago we were thinking of somewhere in the neighborhood of two years to get there. We do see more profit on margins as we go forward, so we’re not worried about the slightly lower margins,” Shah said during the earnings call.

Here’s M&M’s Q2 in numbers:

Particularities Q2 FY23 Q1 FY23 Q2 FY22
Revenue ₹29,870 crore ₹28,412 crore ₹21,470 crore
Net profit ₹2.773 crore ₹2,196 crore ₹1,929 crore
Volumes – car (units) 1.74.098 1,49,803 99,334
Volumes – tractor (units) 92.590 1,17,413 88,027

Source: Company Reports

Overall demand momentum remains very strong

M&M’s Executive Director Rajesh Jejurikar was optimistic about the SUV segment. “General demand momentum remains very strong. The Scorpio-N has been very successful and the classic, which is an updated version, is also seeing very, very strong momentum,” he said.

The company said its order book as of Nov. 1, 2022 was 2.60,000 units — half of these bookings are for the Scorpio-N (including Classic), the company said.

“Celebratory sales have been strong this year in the automotive and agricultural sectors. With the unveiling of the XUV4OO and our Born Electric Vision, we are entering the electric SUV segment and aiming to take a leading position in the future.” added Jejurikar.

SUV Open bookings Bookings per month
XUV300 13,000 6.400
XUV700 80,000 11.100
thar 20,000 4,900
Bolera (incl. Neo) 13,000 8,300
Scorpio-N (incl. Classic) 1,30,000 17,000

Source: Company Reports

“We are comfortable with the current number of bookings we have,” said Jejurikar.

BS VI Phase II Transition to Increase Cost

The BS VI Phase II transition will come into effect from April 1, 2023, and compliance with the new regulations will increase the cost of cars, the company said.

“Our cost increase is in the range of 9,000-15,000 per vehicle. We will make the transition to the BS VI Phase II adequately in advance,” Jejurikar said during the win call.

However, according to ICRA Vice President Rohan Kanwar Gupta, the price increase (industry-wide) will be marginal compared to the transition from BS IV to BS VI.

“The new standards are likely to lead to a marginal increase in the overall vehicle price, with the changes required being relatively lower than the previous transition (BS IV to BS VI),” Gupta said in October.

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