(CMP: Rs. 605; MCap: Rs. 75,214 crore)
Mahindra & Mahindra (M&M) reported a relatively healthy operational performance in Q1FY21 with margin beat being a key highlight for the quarter.
Q1FY21 Earnings Summary
- Standalone net sales for the quarter were at Rs. 5,602 crore (down 56.6% YoY), broadly in line with our estimates of Rs. 5,403 crore. ASPs for the automobile segment surprised positively, coming in at Rs. 6.9 lakh/unit while ASP for tractor segment was a little lower than expectations at Rs. 5.1 lakh/unit
- Standalone EBITDA in Q1FY21 was at Rs. 549 crore with corresponding EBITDA margins at 9.8% (down 261 bps QoQ) vs. our estimate of Rs. 449 crore at 8.3%. The margin beat was on account of lower than anticipated other expenses (down 310 bps QoQ)
- Automotive segment posted loss at the EBIT level of Rs. 576 crore while EBIT margins in the tractor segment expanded strongly by 280 bps QoQ to 20.4%
- Consequent standalone PAT for the quarter came in at Rs. 112 crore vs. our expectation of Rs. 184 crore. There was a miss on the profitability front despite in line revenues and higher-than-expected margins on account of much lower other income than anticipated and substantial YoY jump in interest costs
We have a positive view on M&M courtesy its market leadership in the tractor segment, which is witnessing robust demand prospects. We are also enthused by the company's reinforced prudent capital allocation strategy. We will be coming out with a detailed report soon.
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