Mahindra & Mahindra Ltd, India's second largest multi-utility vechile manufacturer, has reported a net profit of Rs 293 m for the quarter ended March 31, 2001, a decline of 61% compared to the corresponding period last year. The main reasons for the sharp drop in operating margins was high costs associated with euro compliance. The company did not pass on the cost due to subdued demand during the year. Another reason is the fact new product launches in both the tractor and automotive segments have lower profit margins, as compared to already established older products.
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In the farm equipment sector, though the company increased its market share substantially to 33.6% as against 27.1% in the previous year, it recorded a slight drop in the last quarter. The company sold 79,237 tractors during the year registering a growth of 12%. However, this is remarkable in light of negative growth registered by the industry during the year. M&M's recent launch of the "Arjun" series in the high horse power segment has received a good response. "Arjun" is targeted towards knowledgeable rich farmers.
The company recorded a sharp drop in volumes in the automotive segment reflecting sluggish demand growth in the economy.
Light commercial vehicles
At the current market price of Rs 124, the stock is quoting at 11 times its FY01 earnings. With the forecast of a normal monsoon, one can expect volumes to improve in the current year.
Mahindra & Mahindra has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, revenues grew by 15.6% YoY and adjusted net profits grew by 18.5%.
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