M & M 2Q: Disappointing results - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

M & M 2Q: Disappointing results

Oct 25, 2000

Tractors and utility vehicles giant Mahindra & Mahindra has reported a 78% decline in net to Rs 132 m for the 2QFY01. Its sales went up from Rs 8,262 m in the 2QFY00 to Rs 8,399 m in the 2QFY01, a miniscule 1% growth.

(Rs m)2QFY002QFY01Change
Sales 8,262 8,399 1.7%
Other Income 305 370 21.2%
Expenditure 7,182 8,039 11.9%
Operating Profit (EBDIT) 1,080 361 -66.6%
Operating Profit Margin (%)13.1%4.3% 
Interest 355 291 -18.2%
Depreciation 302 339 12.3%
Profit before Tax727102-86.0%
Other Adjustments39- 
Tax 163 (30)-118.5%
Profit after Tax/(Loss) 604 132 -78.2%
Net profit margin (%)7.3%1.6% 
No. of Shares (eoy) (m) 110.5 110.5  
Diluted number of shares 110.5 110.5  
Diluted Earnings per share*21.94.8 
PER (x)6.429.4 

Though we were expecting a decline in profits for M & M in this quarter, these results are worse than our expectations. Hence we would have to downgrade and review our current FY01E forecasts.

The main reasons for the above performance seem to be the dismal demand conditions in both its main businesses, tractors and utility vehicles (UVs).

Its UV volumes have declined by 18% YoY to 25,798 units for the 1HFY01. The main reasons for this performance has been the uniform sales tax at 12% and the drought like conditions that prevailed earlier in certain states. Its market share in the UV segment has fallen to 46.2% in the 1HFY01, as compared to 60.7% in 1HFY00.

1HFY01Volumes (nos.)% growthMarket share
Utility vehicles25,798-18.0%46.2%
Light commercial vehicles3,3776.5%13.9%
Tractors40,1509.5%35.7%

In the tractor industry, M & M has managed to increase its volumes in a declining market. Its volumes for the 1HFY01 went up by 9.5%YoY to 40,150, while all other players saw a decline in their volumes. Its market share too rose from 28.8% in the 1HFY00 to 35.7% in the 1HFY01. The main reason mentioned by the company for better performance is the strong efforts of the company's sales force, even in the drought like conditions.

However as the overall tractor market has been lackluster, the company's realisations in this segment have been under pressure. Besides the costs related to Euro compliance too are being absorbed by M & M, as they do not want to pass it on to consumers. This too will put a pressure on the company's operating margins.

On the current price of Rs 140 it is trading at 5.9x, FY00 EPS of Rs 23.8. The stock was up 4% in today's trading.

Equitymaster requests your view! Post a comment on "M & M 2Q: Disappointing results". Click here!

  

More Views on News

M&M Announces Quarterly Results (1QFY22); Net Profit Down 482.2% (Quarterly Result Update)

Aug 9, 2021 | Updated on Aug 9, 2021

For the quarter ended June 2021, M&M has posted a net profit of Rs 7 bn (down 482.2% YoY). Sales on the other hand came in at Rs 192 bn (up 60.2% YoY). Read on for a complete analysis of M&M's quarterly results.

M&M Announces Quarterly Results (4QFY21); Net Profit Up 295.7% (Quarterly Result Update)

Jul 8, 2021 | Updated on Jul 8, 2021

For the quarter ended March 2021, M&M has posted a net profit of Rs 13 bn (up 295.7% YoY). Sales on the other hand came in at Rs 215 bn (up 31.5% YoY). Read on for a complete analysis of M&M's quarterly results.

Mahindra & Mahindra Shares Surge on Bagging Contract for Defense Equipment (Views On News)

Jun 4, 2021

Mahindra & Mahindra has signed a contract with the Ministry of Defence.

Forget Tesla. Here Are 3 Indian Companies Betting Big on EVs (Views On News)

Jul 9, 2021

Three stocks to watch out as India's EV revolution gets underway.

Massive Surge in the Shares of Tata Motors Today. Key Factors Favouring the Rally (Views On News)

Oct 13, 2021

Tata Motors zooms 23% after report of TPG investing Rs 75 bn in EV arm.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

M&M SHARE PRICE


Dec 1, 2021 03:31 PM

TRACK M&M

M&M - MARUTI SUZUKI COMPARISON

COMPARE M&M WITH

MARKET STATS