The News International Team
Utility vehicle maker Mahindra and Mahindra (M&M), which will announce its second quarter earnings on Friday, is expected to report a profit of Rs 946 crore as against Rs 989.5 crore in the year-ago period, according to the average of estimates of analysts polled by CNBC-TV18.
Revenue is likely to be Rs 9,292 crore during the quarter compared to Rs 8,929.5 crore in same quarter last year. Operating profit expected to be at Rs 1,167 crore as against Rs 1,144 crore and margin may be at 12.5 percent compared to 12.8 percent during the same period.
Results are not comparable on year-on-year basis due to merger of loss making truck business. The company will provide the merged entity comparable numbers in the press release as they do every quarter.
Operational performance weak:
Volume growth was tepid during the quarter. The company sold 1.76 lakh units in second quarter of current financial year 2014-15, up only 0.6 percent compared to 1.75 lakh units in same quarter last year.
Auto sales declined 0.8 percent to 1.15 lakh units from 1.16 lakh units while tractor sales grew 3.2 percent to 61,152 from 59,264 units during the same period.
Sales mix has turned unfavorable on sequential basis. Proportion of high margin tractor business has fallen to 35 percent of overall sales in Q2 as against 40 percent in Q1FY15.
In Q1, the company cut the tractor guidance for FY15 to 5 percent as against 8 percent earlier. Even the company has seen weakness in utility vehicle segment due to intense competition from Renault duster, Ford eco sport etc.
Utility vehicle sales declined 8.5 percent sequentially (flat year-on-year) to 47,822 units.
However, the commendable part is for the last few quarters despite weak volumes, company has maintained profitability in both auto and tractor segment.
Market share consistently falling in UV segment:
UV market share slipped to 42 percent in FY14 from 48 percent in FY13 and 55 percent in 2012. As on Q1FY15, UV market share of the company dropped further to 40.4 percent.
However, tractor segment market share continued to rise. As on Q1FY15, tractor market share was 42.2 percent, the highest in last 10 quarters.
Other income is usually very high in Q2 as company recognises dividend income from its subsidiaries. So analysts expect other income of Rs 450 crore during the quarter compared to Rs 190 crore in previous quarter due to dividend from subsidiaries like Tech Mahindra.