Mahindra & Mahindra Ltd. reported strong profit growth in the June quarter aided by one-offs, but the stock dropped after margins contracted.
Net profit increased 12.4 percent to Rs 955.2 crore, from Rs 850.1 crore in the April-June quarter last year, according to the company's filing on the Bombay Stock Exchange. The profit performance surpassed the Rs 893.5 crore consensus of analysts tracked by Bloomberg.
However, the earnings included Rs 91 crore profit from the transfer of agri-business to a fully owned subsidiary, the company added. Other income jumped 31.2 percent to Rs 216.8 crore from dividend received from subsidiaries and joint ventures.
Revenue rose 14 percent to Rs 11,800 crore in the quarter.
Earnings before interest, tax, depreciation and amortisation grew 3.2 percent to Rs 311.7 crore. EBITDA margin, however, dropped 113 basis points to 10.76 percent, as employee costs and other expenses rose.
The management said the double digit growth in domestic sales of tractors and two wheelers in the June quarter signalled a recovery in rural demand. The management is also bullish about a pickup in industrial activity and private capital expenditure in the near-term.
Given the robust fall rainfall received thus far, and the Indian Meteorological Department's prediction of normal rains for the rest of the monsoon season, rural demand can be expected to gather further strength in the coming months, providing a much needed boost to industrial activity in the country.Mahindra & Mahindra's Press Release
The stock fell close to 2 percent to Rs 1,446 after the announcement of the June quarter earnings.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
