Tractor and utility vehicle maker Mahindra & Mahindra posted a better-than-expected 27% rise in quarterly profit on Wednesday on strong exports and tractor sales.

However the company, the world’s fourth largest tractor maker, said it was cautious about the rest of the year because of high fuel prices and rising interest rates, according to Reuters.

The report said robust economic growth and cheap loans in India have boosted sales of utility vehicles, including Mahindra’s Bolero and Scorpio models. Mahindra has a 45% share of this market and also owns 51% in a joint venture with Renault to make the no-frills Logan sedan in India from 2007.

Mumbai (once called Bombay) -based Mahindra said net profit rose to INR1.57bn rupees ($US35 million) in the fiscal second quarter from 1.24bn a year ago. Net sales rose 23% to 19.15bn.

The median forecast among 13 brokerages polled by Reuters was for net profit of 1.39bn rupees on revenue of 18.52bn.

Reuters noted that Mahindra will make 50,000 commercial vehicles a year for India and overseas markets from 2007 in a $92 million deal with Navistar‘s International Truck and Engine Corp.

It is also looking to export the Scorpio to new markets and setting up a manufacturing facility in South Africa, its biggest export market for passenger vehicles, to make a diesel variant, the report added.