Mahindra’s margin improves led by record growth in tractors in the second quarter — profit declines 3%
- Excluding the one-time impairment, M&M’s consolidated net profit was down 3% at ₹1,311 crore compared to the same quarter last year.
- The company’s operating margin improved from 14.1% to 17.8% compared to the same quarter last year.
- Tractor sales remain robust led by rural demand, but commercial vehicles remains under pressure
Meanwhile, revenue rose 6% to ₹11,590 crore in the quarter under review. The silver lining is the improvement in the company's operating margin from 14.1% to 17.8% compared to the same quarter last year.
|M&M||Consolidated July- September 2020 (YoY)|
Tractors business shines
AdvertisementM&M’s high margin tractor volumes offset a large dent in its earnings. The revenue from the farm equipment segment (which includes tractors) grew nearly 25% compared to the same period last year.
“In Q2 F2021, the Indian tractor industry reported a growth of 41.4% which is the highest ever Q2 quarter growth for the tractor industry led by the timely relaxation of the COVID lockdown restrictions for the Agricultural sector supported by healthy reservoir levels, a good increase in MSP for Kharif crops and important reforms in the agriculture sector announced by the government,” it said.
The company sold 31% more tractors compared to last year.
|Mahindra||Q2 2021||Q2 2020||Growth %|
However, the commercial vehicle segment continues to remain under pressure.
The festive season is fuelling hopes
With the arrival of the festive season, M&M is looking to sustain the demand and remain positive in their outlook. They expect “that tractor demand will remain robust during the upcoming festive season.”
Investors seemed to cheer the operationally strong performance posted by Mahindra. Its shares gained to day’s high point, minutes after the earnings announcement.
To boost its festive sales, Mahindra also recently launched Mahindra Thar 2020, which poses a tough competition to its peers in the segment. The company said that “it has found acceptance amongst a larger base of lifestyle seekers with an overwhelming response from the customers leading to bookings crossing the 20,000 mark.”
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