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Rural Economy Demand Drives M&Ms Growth, Tractor Business Outlook Revised To 20%


M&M Logo
Mahindra & Mahindra – manufactures and markets utility vehicles, light commercial vehicles and three-wheeler. Its products include Scorpio, Bolero, electric vehicles, pickups and commercial vehicles.
Attributing the good Q2 numbers due to the normal monsoon and good Kharif sowing driving the Rural Economy demand. The company has also confirmed two specific headwinds – first on account of the loss in fiscal excise benefits (250 bps) for its Haridwar facility that are no longer available from this year and the second one coming in from depreciation i.e. impact of 100 bps due to change in accounting method.

Automotive Sector

  • 5% volume growth (attributed mostly to growth in demand for Vans & Cars) in its Domestic Market Performance in terms of vehicles sold.
  • On the export front 11.3% volume growth (attributed to 76% growth in Australian market).
  • Revenue growth at 11.7% from Rs. 6,012 crore to Rs. 6,716 crore
  • PAT stood at Rs. 650 crore against Rs. 578 crore


Farm Equipment Sector

  • 4% volume growth against the Industry volume growth of 27.6%. This resulted in the company achieving its highest half yearly market share at 42.6% in the history of the company.
  • On the export front 19.7% volume growth (attributed to 80% growth in South African market).
  • Revenue growth at 23.5% from Rs. 2,830 crore to Rs. 3,495 crore
  • PAT stood at Rs. 624 crore against Rs. 456 crore

Buoyed by the tractor demand in October which resulted in a lower than comfortable inventory at both its factory and at the dealers, M&M has revised its outlook for tractor business from the current 15% estimation to 20% for the full year. It also plans to launch 2 new tractor models next year i.e. a sub 30 HP from M&M and a 50 HP from Swaraj Engines.
On the auto segment – M&M witnessed volumes of Scorpio never seen in the history of the company even when the product was launched back in 2002 – highest ever retail sales. M&M has also placed hopes on the Hybrid version of Scorpio which as well witnessed large retail volumes in October. On the Bolero front which had seen a slump in sales due to a higher excise duty, now has gone cheaper by Rs. 1 lakh with the reclassification of the unit as a non-luxury vehicles thereby bringing down the cost for the customers.
Company hopes that any fall in sales due to the demonetization issue will be balanced back in Q3 and Q4 once the sentiments are calmed down.
M&M has lined up a couple of launches for the next 18-24 months as other OEMs enter the UV market which currently stands at 25% of all vehicles sold from the earlier 18%-19% annually.

  • Mahindra S101 – the entry level mini SUV positioned to lure prospective premium hatchback customers
  • Codenamed U321 – scheduled to launch in the second half of 2017-18. Its diesel variant will be powered by the 1.99L mHawk engine, while the petrol variant could pack a bigger engine from the ‘mFalcon’ family that originated in the KUV100.
  • Codenamed U301 – this would be the next gen Bolero.
  • Codenamed U215 – is the facelifted Quanto.

In addition to these, its planned facelifs of SsangYong Rexton Facelift, SsangYong Korando and SsangYong Tivoli.


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