M&M Q3 Results: PAT Rises 14% To Rs 1,528 Crore; Revenue Jumps 41%

Auto major Mahindra and Mahindra (M&M) posted strong revenue growth for the third quarter of the financial year. This buoyant growth was owing to robust sales for the farm vertical as well as SUVs and three wheelers. Revenues for the quarter under review grew by 41 per cent year-on-year (YoY) while earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped 56 per cent.

However, profit after tax (PAT) after exceptional items came in at Rs 1,528 crore, up 14 per cent. PAT before exceptional items (net of tax) was up 52 per cent to Rs 2,029 crore.

Manoj Bhat, group chief financial officer (group CFO), M&M, said the company took a one-time correction on the fair valuation of its trucks and buses business. This constituted the bulk of its exceptional items.

In terms of volume growth, Q3 of FY23 was positive for M&M across segments. The farm segment posted the highest-ever Q3 volumes at 104,900 units, up 14 per cent YoY. The auto segment, too, posted the highest-ever Q3 volumes of 176,000 units, up 45 per cent. Also, the three-wheelers unit posted the highest-ever volumes of 11,800 units during the quarter.

Rajesh Jejurikar, executive director, M&M, said that in the farm sector it has garnered a market share of 41 per cent, while it ranked number 1 in terms of value market share in SUVs at 20.6 per cent.

“We believe the farm machinery segment will be our strong growth story,” Jejurikar told the media on Friday.

He added that globally, the farm machinery segment is much larger than the tractors segment, but in India it is the other way round.

As of FY22, if tractors were a $60-billion market, farm machinery was a $100-billion market. In comparison, in India, tractors are a Rs 47000-crore market versus a Rs 9,300-crore market in the case of farm machinery.

“Thus, this poses a huge opportunity for us in the next five years.

We will target 10-times more revenues from farm machinery that will also include revenues from exports,” he added.

Year till date, the farm machinery segment has seen a 40 per cent growth for M&M. The company did not disclose segment-wise break-up for the farm vertical.

Jejurikar added that the company plans to launch 15 new products in the segment. It now has an in-house manufacturing facility for farm machines at Pithampur, apart from its rapid channel expansion and focus on exports.

M&M’s SUV volumes have grown during the quarter to 90,797 units. The company said it is witnessing strong traction for its new Thar, which has been priced at Rs 9.9 lakh.

M&M has also announced an investment of Rs 1,000 crore over the next five years for setting up an electric three-wheeler and last-mile connectivity commercial vehicles facility.

Meanwhile, its Rs 10,000-crore investment for the EV plant in Maharashtra is on track. The company is targeting 30 per cent of its total vehicle sales to come from EVs by 2027.

Jejurikar, however, admitted that while the company is on track with adding capacities, it is unable to utilise the capacities to its fullest. This is due to supply disruptions globally.

“We do have an issue right now with airbag sensors etc, which is impacting our ability to produce Scorpio and the XUV 700. We have created 39,000 units per month capacity ahead of target, but there will be variability in the ability to deliver. This will depend on the dynamic situation of availability of semiconductors or any other part of the supply chain,” he said. There are some 200 types of semiconductor chips that go into making the Scorpio and the XUV700.

M&M has bookings of 266,000 units for SUVs that are yet to be delivered. Of this, 119,000 open bookings are for the Scorpio.

FOCUS AREAS

• M&M will now focus on growing farm machinery revenues by 10-fold in next 5 years
• It has 2.6 lakh open bookings for its cars
• Semiconductors and other parts availability hitting production ramp up
• Farm and auto segments post highest-ever Q3 volumes