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M&M: Profits surge on a low base - Views on News from Equitymaster
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M&M: Profits surge on a low base
Jan 25, 2010

Performance summary
  • Standalone sales grow by 56% YoY during 3QFY10, aided by strong performance from both the business segments. While the automotive segment grows by 87% YoY, the farm equipment segment grows by 28% YoY.
  • Volumes of the utility vehicle segment surge by 73% YoY during the quarter. Domestic tractor volumes up 38% YoY.
  • Operating margins surge to 14.5% during the quarter, from just 2.4% in 3QFY09. Stock related adjustments and lower staff costs (both as percentage of sales) lead to this rise in margins.
  • A robust growth in operating profits flow through to the bottomline that multiplies by over nine times, though on a very low base.
  • Sales and net profits for 9mFY10 grow by 41% YoY and 262% YoY respectively.
Standalone performance snapshot
(Rs m) 3QFY09 3QFY10 Change 9mFY09 9mFY10 Change
Sales 28,650 44,787 56.3% 93,659 131,732 40.7%
Expenditure 27,975 38,276 36.8% 89,122 111,878 25.5%
Operating profit (EBDITA) 676 6,511 863.9% 4,537 19,853 337.6%
Operating profit margin (%) 2.4% 14.5%   4.8% 15.1%  
Other income 645 428 -33.7% 2,902 3,056 5.3%
Depreciation 698 984 41.0% 1,983 2,760 39.2%
Interest 76 82 8.6% 278 269 -3.1%
Profit before tax 548 5,873 972.5% 5,178 19,879 284.0%
Extraordinary income/(expense) - -   103 908  
Tax 112 1,736 1455.6% 1,092 5,612 414.0%
Profit after tax/(loss) 436 4,137 848.9% 4,188 15,175 262.3%
Net profit margin (%) 1.5% 9.2%   4.5% 11.5%  
No. of shares       258.6 279.8  
Diluted earnings per share (Rs)*         69.2  
P/E ratio (x)*         15.4  

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