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Mahindra & Mahindra Ltd: All-round Show - Views on News from Equitymaster
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Mahindra & Mahindra Ltd: All-round Show
Nov 14, 2017

Mahindra & Mahindra has announced its financial results for the second quarter of the financial year 2017-18 (2QFY18). During the quarter, revenues grew by 19% YoY and adjusted net profits grew by 22%.

Performance summary
  • For 2QFY18, net sales grew by 19% YoY. Both the farm and automotive segment performed strongly with Farm Segment growing by 30% YoY and automotive segment growing by 16% YoY.
  • Over all volumes for the quarter were up by 16% YoY. On realization front, farm equipment business saw a small decline and was down 1% YoY, where the automotive business saw an increase of 6% YoY.
  • Operating profits for the quarters grew higher than the sales and were up 35% YoY with margins expanding by around 190 bps. The increase in the raw material prices was passed on to the customers both in the automotive and farm segment.
  • Net profits were up by 22% YoY with margins expanding by 20 bps to 11.7%. The board has recommended issue of bonus share in proportion of 1:1.

    Financial performance: M&M and MVML** combined
    (Rs m) 2QFY17 2QFY18 Change
    Net sales 100648 120179 19.4%
    Expenditure 86414 100946 16.8%
    Operating profit (EBDITA) 14,234 19,233 35.1%
    EBDITA margin (%) 14.1% 16.0%  
    Other income 6881 5549 -19.4%
    Depreciation 4602 3992 -13.3%
    Interest 550 440 -20.0%
    Profit before tax 15,963 20,350 27.5%
    Tax 4396 6241 42.0%
    Profit after tax / (loss) 11,567 14,109 22.0%
    Net profit margin (%) 11.5% 11.7%  
    No. of shares (m)   621.1  
    Diluted earnings per share (Rs)*   57.7  
    Price to earnings ratio (x)*   24.59  

    (*Trailing twelve-month earnings)
    (**Mahindra Vehicle Manufacturers Ltd)

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DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report.
  2. Neither Equitymaster, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Equitymaster's Associate(s) has/have financial interest in Mahindra and Mahindra Ltd.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
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  4. Equitymaster's Associate has received fees for services provided other than investment banking or merchant banking or brokerage services from Mahindra & Mahindra Ltd in the past twelve months.
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