InvestorQ : What do you suggest on Mahindra & Mahindra after the weak results it announced for the September quarter?
Sam Eswaran made post

What do you suggest on Mahindra & Mahindra after the weak results it announced for the September quarter?

Answer
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swati Bakhda answered.
11 months ago


The weak results of M&M were largely in line with the auto sector overall and that is more of a systemic issue than a company specific issue. Mahindra & Mahindra reported a 26.5% drop in standalone net profit to Rs.1,213 crore for the September quarter. This compares unfavourably with a net profit of Rs.1,649 crore in the corresponding quarter last year. Overall sales revenues of M&M also dropped 15% to Rs.11,076 crore from Rs.12,989 crore. In fact, the total number of vehicles sold stood at 1,10,824 during the September quarter was nearly 21% done compared to 1,41,163 units sold in the Sep-18 quarter. Tractor sales fell by 6% while exports slumped 21% to 10,540 units.

The MD of M&M underscored that the group had witnessed market share growth in every segment. Mr. Goenka has also pointed out that although the overall profit was down M&M had successfully maintained the operating margin. The numbers were a little more disappointing on a consolidated basis. For the quarter, the company reported consolidated revenue from operations fell by 6% to Rs.23,936 crore. Consolidated profit after tax (PAT) was down a massive 78% at just Rs.368 crore

The auto sector, and M&M is no exception, faced weak consumer sentiments and a continuing liquidity crunch. This coupled with high consumer finance rates impacted the demand for automobiles in a big way. However, M&M does look undervalued if you look at the stock more as a sum of parts play and for long term investors it is still a good play on the auto space.