Mahindra & Mahindra, India’s largest utility vehicles maker, has reported a better than expected 8% rise in quarterly net profit.

Mahindra, also a key tractor maker, said its business outlook for the year remained positive but watchful, according to Reuters, as interest rates and fuel prices rise.

Mahindra’s July rose 41% year on year, ahead of industry estimates.

“With headline inflation ranging above 9% for much of the past year, the RBI has tightened its policy stance aggressively in recent months leading to a sharp rise in loan rates with inevitable adverse impacts on domestic demand and industrial growth,” Mahindra said in a statement.

It booked net profit of INR6.05bn (US$135m) for its fiscal first quarter ended 30 June, compared with INR5.6bn a year ago. Net sales rose 30% to INR66.7bn.

Analysts, on average, expected net profit of INR5.9bn, according to a Reuters poll of brokerages.