Mahindra & Mahindra reported a 44% year-on-year rise in consolidated net profit to ₹2,773 crore in Q2.- It sold 1.74 lakh auto units in Q2 - 91,800 SUVs and 49,000 pickup trucks.
- The company’s executive director
Rajesh Jejurikar said the overall demand momentum continues to be ‘very strong’.
Its total revenues stood at ₹29,870 crore during the quarter, registering a growth of 38.7% from ₹21,470 crore in the same quarter last year, the company said on Friday.
This is driven by healthy growth in volumes after its sports utility vehicles (SUV) and pickup trucks hit their highest-ever quarterly sales.
SUV sales grew 85.6% YoY and helped M&M top the category for the third consecutive quarter, the company said in its earnings release.
M&M reported a 5.2% increase in tractor sales to 92,600 units, year-on-year but fell sequentially in Q2. Its market share remained unchanged YoY in this segment at 40.1%, but held on to its numero uno position.
“While the auto segment has led growth, we have seen steady performance across our group companies,” said Dr Anish Shah, MD and CEO of M&M.
M&M’s Q2 operating margins stood at 11.98% in Q2 FY23 on a standalone basis, as against 12.47% a year ago. It said in September last year that it expects margins in the auto segment to improve by 3% in the medium term.
The company today stated that it has already achieved an improvement of 2.4% in margins during the second quarter. The margin improvement was aided by the end of introductory pricing on its current flagships, the XUV700 and Thar, and a cost reduction programme.
“We delivered on margins faster than what we had promised. A year ago, we were thinking of somewhere in the range of two years to get there. We do see more upside on margins as we go forward and therefore, we are not worried about the slightly lower margins,” Shah said during the earnings call.
Here’s M&M’s Q2 in numbers:
Source: Company reports
M&M’s executive director Rajesh Jejurikar was bullish about the SUV segment. “Overall demand momentum continues to be very strong. The Scorpio-N has been very successful and the classic, which is a refreshed version, also sees very, very strong momentum,” he said.
The company said that its orderbook stood at 2,60,000 units as on November 1, 2022 – half of these bookings are for the Scorpio-N (including Classic), the company said.
“Festive sales have been strong this year across auto and farm sectors. With the unveiling of the XUV4OO and our Born Electric Vision, we enter the electric SUV segment and aim to establish a leadership position in the future,” Jejurikar added.
Source: Company reports
“We are comfortable with the current level of bookings we have,” Jejurikar said.
The BS VI Phase II transition will be effective from April 1, 2023, and complying with the new regulations will increase costs of cars, the company said.
“Our cost increase is in the range of ₹9,000-15,000 per vehicle. We will make the transition to the BS VI Phase II adequately in advance,” Jejurikar said during the earnings call.
However, the increase in prices (industry-wide) will be marginal when compared to the transition from BS IV to BS VI, though, according to ICRA Vice President, Rohan Kanwar Gupta.
“The new norms are likely to lead to a marginal increase in the overall vehicle price, with the changes required relatively lower vis-vis the previous transition (BS IV to BS VI),” Gupta said in October.
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