INDIA: Mahindra & Mahindra quarterly result surprises
Utility vehicle and tractor maker Mahindra & Mahindra on Tuesday posted a better-than-expected 75% rise in quarterly profit, according to Reuters.
Raw material costs fell 30% in the quarter, helping lift operating margins to 12.9% from 11.9% a year ago, the report noted.
"Our cost-cutting measures and higher volumes have clearly helped, and we have also successfully worked on cheaper sourcing," a spokesman told the news agency, adding: "We really expect to see the impact of cheaper inputs coming into effect in the coming quarters."
Mahindra reportedly said net profit rose to INR2.33bn rupees ($53 million) in the fiscal third quarter from INR1.33bn a year ago on net sales up 25% to INR22.07bn.
That beat the median forecast in a Reuters poll of 11 brokers for INR1.72bn profit and was in line with a revenue forecast of INR22.2bn - profits included a one-time INR484m earned on the transfer of a light commercial vehicle unit.
"We are living in a time of volatility, so we will continue to focus on cutting costs and on higher sales," the spokesman told the news agency.
Formed in 1945 to make Jeeps for India, Mahindra has nearly 50% of the Indian utility vehicles market, Reuters said.
"The improvement in operating margins is significant, and the margins are sustainable if they can keep up volumes," Rohan Korde, an analyst at Prabhudas Lilladher, told the news agency, adding: "While auto sales have slowed, tractor sales and exports have made up for that."
Reuters said that Mahindra expects to sell 34,000 units of the Scorpio utility vehicle in the year to March and is setting up a plant in South Africa, its biggest export market for passenger vehicles, to make a diesel variant, and will launch a hybrid SUV in the next three years.