M&M: Q3 earnings drive-in hope

M&M: Q3 earnings drive-in hope

Shares of Mahindra & Mahindra’s (M&M) soared 10% to hit the upper circuit on Monday morning, as the strong earnings performance for the fiscal third quarter drove investor frenzied buying.
On Friday, the SUV maker reported a 40% on-year jump in net profit. Revenue of the firm stood at Rs 14,057 crore, up 16% from the same period last year. It’s earnings before interest, tax, depreciation, and ammortisation (Ebitda) at Rs 3,520.4 crore, down 1% YoY. Ebitda margin came in at 16.3% for the quarter as compared to 18.4% reported in Q3FY20. 

M&M’s third-quarter performance was driven by good performance in both, Tractors as well as Autos businesses.
The company has one of the highest exposures to the rural markets (65% of volumes), which would likely be less impacted by the on-going COVID-19 disruption.
M&M expects the industry to log 20% on-year growth in the tractor segment in the current fiscal year. Current production run rate for Thar is at nearly 3,000 units per month and would be ramped up to 4,000 units per month by April-May. Cumulative bookings as of date are at over 39,000. Further, the SsangYong deal is moving forward, but toward the PrePackage scheme and not the ARS scheme under the bankruptcy court.

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