Mahindra & Mahindra - Q3FY21 First Cut - ICICI Direct

(CMP: Rs. 870, MCap: Rs. 1.08 lakh crore)

Mahindra & Mahindra (M&M) reported a healthy operational performance in Q3FY21. Sustained standalone margin performance of 16% and consequent beat was the key highlight of the quarter. However, as in the previous quarter, large impairment hit on long term investments yet again constrained profitability at the PAT level.

Q3FY21 Earnings Summary

- Standalone net sales stood at Rs. 14,216 crore (up 15.2% YoY), in line with our estimates of Rs. 14,435 crore. The company, however, delivered lower than expected ASPs in in automotive as well as tractor segments, which came in at Rs. 6.92 lakh/unit (down 1.6% QoQ) and Rs. 5.19 lakh/unit (flat QoQ) respectively

- Standalone EBITDA in Q3FY21 stood at Rs. 2,278 crore with corresponding EBITDA margins at 16% (modest dip of 12 bps QoQ) vs. our estimate of Rs. 2,026 crore at 14%. Margin beat was on account of lower than anticipated contraction in gross margins (down 150 bps QoQ vs. expectation of 340 bps depletion). Automotive segment posted ~210 bps increase in EBIT margins QoQ to 6.3% while tractor margins were down by ~100 bps QoQ to 23.4%

- Consequent standalone PAT for the quarter came in at Rs. 31 crore vs. our expectation of Rs. 1,245 crore. PAT came in substantially lower as the company took a large impairment hit of Rs. 1,692 crore in relation to certain long term investments

- The company informed that subsidiary SsangYong Motor (SYMC)'s rehabilitation program under the Autonomous Rehabilitation Support Program (ARS) is unlikely to be concluded. Accordingly, SYMC now plans to submit a pre-packaged rehabilitation plan which may involve capital restructuring for existing creditors and shareholders. M&M recognised an impairment hit of Rs. 1,210 crore in this regard

We will be coming out with a detailed report soon.

Shares of MAHINDRA & MAHINDRA LTD. was last trading in BSE at Rs.865.6 as compared to the previous close of Rs. 866.5. The total number of shares traded during the day was 574679 in over 15076 trades.

The stock hit an intraday high of Rs. 884 and intraday low of 841.5. The net turnover during the day was Rs. 494128885.

Source : Equity Bulls

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