M&M Reports Staggering 56% Profit in FY23

Mahindra and Mahindra Ltd reported an 18% increase in fiscal fourth-quarter combined net profit on Friday. It is boosted by strong sales of SUVs and tractors.

Profit for the three months ending March was Rs. 2,637 crores. Revenue increased by 25% year on year to 32,366 crores.

The corporation issued a dividend to shareholders of 16.25 cents per share with a face value of 5, representing a 325% payout. According to the company, net profit of 10,282 crores for the fiscal year ended March was an all-time high for the Mumbai-based automaker.

It was owing to successful introductions in the automotive sector and steady growth in agricultural machinery. Also due to strong operating performance in financial services, and value revealing through monetization and partnerships.

M&M recorded its highest-ever sales of cars of 698,000 cars in FY23, a 50% increase, as well as a high tractor business of more than 400,000 units.

Anish Shah, managing director, and CEO, stated that the company has boosted its capital investment spending for FY 22-24 by 5.5% to 15,900 crore due to strong growth in vehicle and tractor sales.

When asked if an El Nino in the later part of the rainy season could impact the countryside demand for agricultural machinery, Shah claimed the weather phenomena isn’t a huge obstacle.

He cited a 50-year analysis that found median tractor business expansion in El Nino-affected seasons was 8%. “Given the strong reservoir capacity and increase in rural investment ahead of the nationwide elections, we expect a little effect on tractor volumes in the present fiscal year,” he said.

On the impact of semiconductor chip scarcity, Rajesh Jejurikar, ED as well as CEO (auto and agriculture sector), M&M, estimated a 12,000-unit output loss in the March quarter. “We anticipate that the industry-wide deficit will persist for another four to six quarters.”

Amidst the high inflationary climate and stricter Basel emission standards, M&M’s car margins increased to 7.3% throughout the quarter. It is only 50 basis points shy of the 7.8% reported in FY19, attesting to the company’s excellent performance.

JP Morgan has a one-year price desire of 1520 on the shares.

It is an 18.6% increase from Friday’s closing level of 1,281.85, citing “continued power in autos because of SUV launches as well as an impressive order book; an overall recuperation in tractors; along with a stock re-rating owing to improving ROE.”

“M&M is in the middle of an exceptionally strong model process in SUVs. In our opinion, it could benefit from the cyclic resurgence in light CVs (which is already a leader).”

Over the last year, the stock has returned 57%, which makes it the second-best performer after ITC.

In the January-March quarter of FY 2021-22, the Mumbai-based company declared a PAT of Rs 2,237 crore and a consolidated PAT of Rs Rs 6,577 crore. According to the corporation, the fiscal year 23 PAT is the largest profit posted in an accounting year.

Revenue during the final quarter of FY23 grew to Rs 32,366 crore, which is up from Rs 25,934 crore the previous year. Revenue for FY23 increased by 34% to Rs 1,21,269 crore from Rs 90,171 crore in fiscal 2021-22.

The automaker has amended its capital expenditure (capex) plan for the FY22-FY24 period to Rs 15,900 crores from Rs 15,075 crore. “Secular growth in revenue across the group, combined with strong operating leverage, has enabled us to surpass the Rs 10,000 crores profit milestone.”

“Our laser-like focus on distributing capital, monetization, and creative collaborations continues to unlock significance,” said Manoj Bhat, CFO of M&M Group.

M&M stated that the automotive sector headed the way in the previous fiscal year with 62%. It is owed to good launch execution and a shift in supply chain concerns. Mahindra Accelo increased by 37%, ML increased by 24%, and Club Mahindra increased by 22%.

“The group has had a record-breaking year. Auto led how with record-breaking launches, and we reclaimed the number one position in SUV revenue market share,” stated Anish Shah, Managing Director, and CEO.

Light commercial automobiles, agricultural machinery, and electric three-wheelers, he said, are helping the company maintain its leadership position.

“We are very well placed for the future, with a solid footing in key industries, technological leadership, and a growth mindset combined with fiscal discipline,” Shah said.

According to the corporation, it had the highest-ever automotive sector volume of 6.98 lakh units in FY23. It is up fifty percent from 4,65,601 units in FY22.

The vertical generated Rs 16,400 crore in sales, a 35% increase over FY22. M&M claimed to be the market leader in SUV sales market share, claiming a 19.6% share in the fourth quarter.

It stated that as of May 1, 2023, open reservations for its SUV line were at 2.92 lakh units, demonstrating ongoing robust automotive demand.

In FY23, the company achieved the highest-ever amount of 4.04 lakh pieces in the farm machinery division. Tractor sales were 4,03,981 pieces last fiscal year, a 15% increase from 3,50,981 pieces in FY22.

According to the corporation, an additional Rs 1,600 crore will be invested in conventional ICE cars to accommodate anticipated regulatory changes and capacity increases.

In a presentation, the manufacturer stated that a further Rs 1,125 crore will be invested in the electric vehicle market to produce cars with evolving requirements.

Around Rs 500 crore was set aside for car and farm investments, according to the Mumbai-based firm. In terms of chip shortages, the corporation stated that it’s going to “wait and watch” over the next few seasons.

Jejurikar stated that the time frame for waiting for the organization’s vehicle models would be reduced significantly in the following six months, with capacity increasing to 49,000 over 39,000 each month.

According to him, a semiconductor shortage caused a manufacturing decline in as much as 12,000 units throughout the March quarter. He stated that there are no plans to introduce any new items for the year.

It is going to be focused on consolidation. He also stated that the 5-door Thar is going to be released in 2024, as opposed to this year.

Concerning the new emission standards, Jejurikar stated that the corporation is “not focusing on the creation of BS-VIII version instantly” until the government provides a greater explanation.

According to M&M, Tech Mahindra’s revenue increased by 19% due to a focus on profit transformation. M&M FS announced its highest-ever disbursements, with assets under management increasing by 27% and gross non-performing assets decreasing by 4.5%.

The board of directors of the firm suggested a dividend of Rupees 16.25 (325%) for each share with a market value of Rs 5 apiece.

Due to valuation mismatches between M&M and Tata Motors, both companies halted the process to sell holdings in their respective EV. This is according to sources who are familiar with the situation.

M&M Ltd sold its whole share in the Spanish CIE Automotive unit on Wednesday, the Indian manufacturer said in an exchange statement.

“We are pleased to inform everyone that the organization has today liquidated its entire stake, consisting of 1,21,22,068 shares of equity, comprising 3.195 percent of CIE’s paid-up share capital.”

The transaction was completed on the stock markets at a gross cost of Rs 447.6501 for each share. “The organization’s stake in CIE has been reduced to zero as a result of the sale,” M&M noted.

Proofread & Published By Naveenika Chauhan