M&M Q3FY22 Preview: Company’s profit likely to slip, revenue to rise; margins could see contraction

Auto major Mahindra and Mahindra (M&M) is likely to report mixed numbers for the third quarter in the financial year 2021-22 on Thursday. Most of the analysts estimate the profit may fall up to 40 per cent, while revenue to grow between 9-8 per cent and margins may witness pressure. 

According to YES Securities earnings preview, the profit of M&M to decline by almost 35 per cent year-on-year to Rs 1122 crore, while revenues to grow by almost 9 per cent to Rs 1,122 crore during the October-December quarter of the current fiscal. 

The brokerage says, “M&M’s S/A volume for third quarter to de-grew around 4 per cent YoY and may jump over 12 per cent sequentially, wherein tractors/automotive sales likely to decline by almost 9/1 per cent, respectively YoY.” 

“We expect M&M’s standalone revenues to grow 9 per cent YoY benefitted by healthy realisations growth of almost 14 and 4 per cent on YoY and quarter-on-quarter basis, similarly, EBITDA margins at 12 per cent, down 400 and 50 basis points YoY and QoQ respectively”, YES Securities added.  

While Motilal Oswal sees the profit of the auto major to slip by over 40 per cent to Rs 1,016 crore as compared to Rs 1,707 crore YoY and revenue to surge by 8 per cent to Rs 15,088 crore as against Rs 13,966 crore YoY. While the margins may also reduction to 12.2 per cent from 16.4 per cent YoY. 

“SUVs and Pickups see good demand recovery but restricted by supply chain constraints; tractor demand under pressure on high base of last year and margins impacted by cost inflation and weaker mix,” the brokerage house said in its Q3 earnings preview report. 

The shares of M&M surged over 1 per cent to Rs 841 per share on the BSE, as against over 1 per cent rise in the S&P BSE Sensex.