M&M Q3 Results Review – Inline Quarter; Auto Business Margin Expansion Continues: Motilal Oswal


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Mahindra and Mahindra Ltd.’s Q3 FY23 operating performance was inline, though profit after tax came in above our estimate thanks to higher other income. The auto business remains on a strong growth path, led by a healthy order backlog. The tractor segment is expected to cross its previous peak in FY23.

M&M merged Mahindra Electric and a few other special purpose vehicles with-effect-from April 01, 2021, and hence the numbers were restated. Standalone revenue/Ebitda/adjusted profit after tax grew 41%/56%/52% YoY to Rs 216.5 billion/Rs 28.1 billion/Rs 20.3 billion. For nine months-FY23, revenues/Ebitda/adjusted profit after tax rose 54%/50%/46.5% YoY.

Volumes grew 32% YoY. Net realisations increased 7% YoY (flat QoQ) to ~Rs 768,200/unit (our estimate: Rs 766,700/unit), led by ~6%/5.5% YoY growth in tractor/auto realisations.

Gross margins declined 130 bps YoY (up 60 bps QoQ) to 24% (inline), hit by lower tractor contribution and higher raw material costs. However, Ebitda margin expanded 130 bps YoY (110 bps QoQ) to 13% (versus our estimate: 12.7%) owing to operating leverage.

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