X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
M & M 2Q: Disappointing results - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 25, 2000

    M & M 2Q: Disappointing results

    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) 2QFY00 2QFY01 Change
    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 Tax 727 102 -86.0%
    Other Adjustments 39 -  
    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* 21.9 4.8  
    PER (x) 6.4 29.4  

    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.

    1HFY01 Volumes (nos.) % growth Market share
    Utility vehicles 25,798 -18.0% 46.2%
    Light commercial vehicles 3,377 6.5% 13.9%
    Tractors 40,150 9.5% 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

    Mahindra & Mahindra Ltd: Robust Performance amid Uncertainties! (Quarterly Results Update - Detailed)

    Jul 4, 2017

    The Growth in the Farm Segment offsets mediocre performance in the auto business.

    Mahindra & Mahindra Ltd: Tractor Demand offsets the Notebandi hit Auto Segment! (Quarterly Results Update - Detailed)

    Mar 20, 2017

    Mahindra & Mahindra has announced its financial results for the third quarter of the financial year 2016-17 (2QFY17).

    Mahindra & Mahindra Ltd: Tractors Demand Upbeat, Gaining Market Share in Auto (Quarterly Results Update - Detailed)

    Nov 22, 2016

    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%.

    Tata Motors Ltd: Another Disappointing Quarter, Management fails to Perform! (Quarterly Results Update - Detailed)

    Aug 14, 2017

    Tata Motors Ltd disappoints again for both India and JLR business. Management commentary indicates a slow year ahead.

    Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! (Quarterly Results Update - Detailed)

    Aug 2, 2017

    GST realted cost impacts Margins, Management expects good year ahead.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    M&M SHARE PRICE


    Aug 23, 2017 (Close)

    TRACK M&M

    M&M 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE M&M WITH

    MARKET STATS