Mahindra Q2 PAT rises 6 pc to Rs 2,348 cr

Mahindra & Mahindra (M&M) on Friday said its consolidated profit after tax grew 6 per cent to Rs 2,348 crore in the September 2023 quarter.

The Mumbai-headquartered company had posted a profit after tax (PAT) of Rs 2,209 crore in the July-September period of the last fiscal, M&M said in a statement.

The company's revenue grew 15 per cent year-on-year to Rs 34,436 crore in the second quarter of this fiscal, it added.

The company said it has witnessed a robust performance across all businesses, except Tech Mahindra, impacted by weak demand and exits from non-core accounts.

It is expecting the domestic tractor market growth to be flat this fiscal against an estimate of a low-single-digit growth earlier.

''During the second quarter, operating performance across auto, farm and services was robust. Auto rapidly grew to double its operating profit. Farm continues to be resilient despite tough market conditions,'' M&M Managing Director and CEO Anish Shah.

Tech Mahindra had a tough quarter. The company is now initiating the transformation journey in the business, he added.

In the automotive sector, the company said, its revenue grew 20 per cent year-on-year to Rs 18,869 crore in the July-September quarter.

''We delivered yet another robust performance in this quarter. We have maintained our SUV revenue market share at 19.9 per cent while further improving our auto standalone PBIT margins,'' M&M Executive Director and CEO (Auto and Farm Sector) Rajesh Jejurikar said at the company's post-earnings call.

He said that raw material prices have softened somewhat but they are not yet anywhere near the 2019-2020 commodity price levels in auto and farm business.

''We have taken significant price increases over the two-and-a-half years, which have offset the material cost...However, we improve overall margins and the business by either operating leverage or better cost structure management.

In the tractor business, the company increased its market share by 150 basis points on the back of new launches of Oja, Swaraj Target and Naya Swaraj, he added.

''At this point of time, we think industry (growth) to be flat for the year and not (grow) single digit as we said earlier,'' Jejurikar noted.

He said that November will see growth because last year there was no festival in the said month, while Diwali this year is falling in this month.

He also said that despite this, the company's expansion plans remain on track.

''It remains on track. Normally, our investment decisions don't get impacted by short-term market (developments),'' he added.

Last year, the industry was at a very high base of 9.50 lakh units, which it had reached, based on a very rapid growth of three years, starting with the Covid-19, Jejurikar noted.

''It is just the adjustment of a very high base. If it is flattish, it will be in that kind (9.50 lakh units) region,'' he added.

On Tech Mahindra, Shah said it is not going to be a quick turnaround as there are a number of things that have to be put in place to be able to gain significant margins to get back to the industry peers. ''I would expect it to be a three-year turnaround. Our focus right now is to ensure that all our businesses have the ability to grow in a significant way. Our approach is to drive significant growth,'' he said. On Mahindra Logistics' growth plans, he said the company has been taking actions to build an end-to-end logistics solutions business. ''Third-party logistics was the mainstay for the business. We are branching into building a strong express and freight forwarding business and that's the goal to reach Rs 10,000 crore of revenue by FY26 by building all of these lines, and this plan is on track,'' Shah stated. On the company's-backed motorcycle brand Classic Legend, he said the company's stated approach for all its growth gems is that if it has a marquee investor coming in, it would continue to look for marquee investors. ''We typically don't look for funding but we look for partnerships, where investors can add value and that is common with all our growth gems. ''So, whether it's for classic legends or any of our gems, we always have a door open for marquee investors, who can add value to the business. But typically, we would want them to come looking for us, not us to go looking for them,'' Shah said. Stating that M&M was not looking at businesses outside its footprint, he said, ''With our auto business, with electric, we're going to put in more investments in electric''. On the acquisition plans, he said, ''We will acquire because we do want to be in a mode of rapid growth. But we will acquire only when we feel that it is a very strong strategic benefit. We can deliver on what we said when we acquire''. In volume terms, the company said it sold 2,12,078 vehicles in the quarter under review compared to 1,79,673 vehicles in the year-ago period, a growth of 18 per cent.

Tractor sales fell 4 per cent to 89,101 units in the quarter under review from 92,590 units a year ago.

On a standalone basis, its PAT grew by 67 per cent to Rs 3,452 crore in the second quarter over Rs 2,068 crore in the year-ago period.