M&M Q2 Preview: SUVs to ride sales higher, tractor ops to languish

Mahindra & Mahindra is likely to report strong growth in sales and profit for the quarter ended September, driven by the stellar performance of the automotive segment, easing of semiconductor supplies, and price hikes.

The strong earnings in the automotive segment will help offset the fall in sales in the tractor segment in the seasonally weak quarter.

Revenue for the quarter is seen rising by more than 54% YoY to Rs 20,525 crore, according to ET Now poll.

“Growth in the auto segment (up 17% QoQ) with better mix would compensate for the drop in tractor segment in a seasonally weak quarter,” brokerage said in its report.

In September, M&M reported highest-ever monthly sales of 64,486 units in the auto segment, due to continued traction in the sports utility segment.

While sales is likely to see strong growth, operational performance will be marred by higher input costs and weakness in the tractor segment.

“We estimate overall EBITDA margin to decline by 70 bps QoQ, led by inferior segmental mix and raw material headwinds,” Kotak Institutional Equities said in a report.

Automotive margin is seen improving by 30 bps to 6% in Q2 mainly due to operating leverage benefits, Kotak Equities said. Higher raw material costs and inferior product mix will restrain the expansion in margin.

Net profit is seen rising 31% on-year to Rs 1,875 crore on the back of higher sales and a higher other income, which is driven by a dividend payout by .

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)