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M&M net surges 26% on tractor, UV growth - Views on News from Equitymaster
According to newspaper reports, Mahindra & Mahindra (M&M) has benefited from higher tractor and utility vehicle (UV) sales in 2QFY2000. This has boosted the company's net profit to Rs 603.7 m (up 26.2%).
M&M is the leader in the utility vehicle segment (61% market share in September 1999) and the tractor segment (29% market share). It is also engaged in the manufacture of light commercial vehicles (LCV). In addition to the automobile segment, the M&M group also has interests in information technology (IT) and realty.
M&M's tractor sales volumes have appreciated 13% in 1HFY2000, while market share has improved to 29% (27% in 1HFY1999). In this period, its market share in the south has improved by 90%, and by 22% in the north.
The company's UV sales have also been on the rise, and it now commands 61% market share (55% in 1HFY1999). UV sales volumes have appreciated 7% in 1HFY2000. The company's increased tractor and UV sales are attributed to new launches positioned in niche areas.
As its foreign currency convertible bonds aggregating US$ 51.7 m have been converted into global depository receipts (GDRs), M&M has reduced its foreign currency exposure substantially and improved its debt-equity ratio.
Market view:
M&M's 26% net profit growth in 2QFY2000 has enthused analysts who have flagged a 'BUY' on the company. Moreover, the company's IT venture (Mahindra-BT) has tremendous growth potential and will boost M&M's valuations when it finally goes public.
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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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