Mahindra & Mahindra managed to meet street expectations in Q1FY22 results. The company’s sales was recorded at Rs.11763Cr with EBITDA at 1632Cr. Due to commodity inflation, the margins declined 80bps on a QoQ basis to 13.9% which was a much better performance in comparison to its peers. The profit grew 24times to Rs.934Cr on YoY basis due to the low base.
The management expects Farm equipment segment(FES) sales to continue its growth momentum in upcoming quarters as well due to a resurgence in the rural economy.
Due to the high base of last year company is hopeful of low-mid single-digit growth in the FES segment in FY22. The company achieved its highest ever market share in the farm Equipment segment in the last eight quarters.
On the other hand, the auto segment witnessed demand recovery in Q1 company looks forward to gain market share with new launches lined up with much Awaited XUV700 making a debut in August 2021.
For the rest half of the year, multiple triggers could push sales in the festive season. Models like Thar, Bolera, XUV300 continue to be in a high waiting period. Management shares that New Scorpio will be launch by year-end.
The company took 3 hikes in tractors & 2 hikes in the auto segment in order to offset the impact of commodity inflation. But going forward management expects some cool-off in the second half of the year in Commodity prices and they have now started showing signs of flattening out.
Management says a lot of work was done in the capital allocation side last year which was strong from a cash flow perspective. Going forward they see working capital benefits to normalize but overall cash flow to remain positive.
