M&M said in Q3FY20, both the Indian auto and tractor industry has shown some signs of trend reversal and has seen moderation in the double digit de-growth seen in Q1FY20 and Q2FY20.
Utility vehicle and tractor maker Mahindra & Mahindra (including 100 percent subsidiary Mahindra Vehicle Manufacturers) on February 8 registered a massive 72.8 percent year-on-year (YoY) fall in Q3FY20 profit due to one-time impairment provision.
The bottom line fell to Rs 380.19 crore for the quarter ended December 2019, from Rs 1,395.96 crore in same period last year, company said, adding excluding exceptional and one-off items, the profit stood at Rs 934 crore against Rs 877 crore, a growth of 7 percent YoY.
M&M said exceptional items in standalone financial results of Rs 600.56 crore for the quarter represented provision for impairment of certain investments.
Revenue from operations during the quarter fell 6 percent YoY to Rs 12,120.3 crore, with a 6.2 percent decline in automotive business and 7.7 percent fall in the farm equipment segment.
But the company said in Q3FY20, both the Indian auto and tractor industry has shown some signs of trend reversal and has seen a moderation in the double-digit de-growth seen in Q1FY20 and Q2FY20.
Good monsoons, the festive season demand, improved liquidity conditions, new launches, especially in the Utility Vehicle (UV) segment and special schemes offered by original equipment manufacturers (OEMs) for the auto industry were the key reasons for this moderation in degrowth, it added.
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The unseasonal rains in the month of October 2019 did cause some damage to the Kharif crop, but the sentiment in the Agri and rural economy is fairly upbeat with good sowing of Rabi crops supported by very good water reservoir levels and government announcement for thrust on infra projects, the company said in its BSE filing.
M&M sold 1.23 lakh vehicles in the quarter ended December 2019, down 8 percent YoY and 81,435 tractors, down 6 percent YoY.
Operating numbers beat analyst expectations with earnings before interest, tax, depreciation and amortisation (EBITDA) rising 5 percent YoY to Rs 1,788.5 crore and margin increasing 160bps YoY to 14.8 percent in Q3FY20.
These were better than the average of estimates of analysts polled by CNBC-TV18 that pegged at Rs 1,741 crore and 14 percent for the quarter respectively, supported by the automotive business.
Automotive segment's EBIT during the quarter grew by 17.6 percent to Rs 541.7 crore, but farm equipment business EBIT dropped 6.4 percent to Rs 830.9 crore compared to the year-ago period.
Other income declined 38.9 percent YoY to Rs 209.21 crore in Q3 also dented profitability.Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.
