M&M’s profit up 26%

Mahindra & Mahindra posted a 26 per cent rise in net profit at ₹1,779 for the quarter ended September 30 compared with the same period last year.

However, below-than-expected festive sales forced the company to cut its sales outlook for passenger vehicles to 7-8 per cent for the financial year as against the 10 per cent target previously announced.

Revenues were up 6 per cent on a yearly basis to ₹12,790 crore. “PV demands have been subdued in Q2 and even in Q3 so far. While festive sales were better than last year, they fell short of expectations. While we previously said that we’ll be able to close the year with a double-digit growth in PV, now we expect it to be only around 7-8 per cent,” said Pawan Goenka, managing director at Mahindra & Mahindra.

UV sales fell 9.5 per cent in the quarter, given the rise in fuel prices, uncertainty over diesel vehicles and rising interest rates, Goenka said. PV sales, for the first time, were higher from the rural segment as the automaker saw 2 per cent growth in rural segment, while there was a drop in the urban sales.

The auto segment is also facing margin pressures with rise in commodity prices. While there was an impact of 250 basis points in the auto segment, Goenka said nearly half of that was passed on to the customers, while the rest was either absorbed by M&M or handled by improving efficiencies.

For Q2 FY19, the auto industry (excluding two wheelers) posted a moderate growth of 4.8 percent. This was due to a high base from Q2 FY18, shift of the festival season to Q3 FY19 and partial slowing down of demand for passenger vehicles, especially in the urban areas.

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