The Board of Directors of Mahindra & Mahindra Limited today announced the financial results for the quarter ended 31st December 2020 of the Company and the consolidated Mahindra Group.05 FEBRUARY, 2021 | India
Mumbai, 5th February 2021: The Board of Directors of Mahindra & Mahindra Limited today announced the financial results for the quarter ended 31st December 2020 of the Company and the consolidated Mahindra Group.
Consolidated PAT (after EI & NCI) for Q3F21 was Rs 704 crores, an increase of 252% from the prior year. The key drivers were capital allocation actions, a 220 bps increase in standalone* operating margins on the back of a 20% growth in tractor volumes and a 12% revenue increase in the Auto business.
Capital allocation actions were targeted at loss-making subsidiaries, these actions have made a significant contribution to the financial performance. They include turnaround of businesses, restructuring to achieve profitability and exit from multiple businesses.
The increase in operating margins was driven by cost optimization and operating leverage. Tractor volumes grew by 19.6% on the back of a robust rural story. We expect strong demand to continue.
Demand for Auto continues to be strong. The UV business grew 11% though production was lower than demand due to ECU and steel shortage.
The key results are as follows:
Key highlights of Q3 performance were:
Areas of concern were:
Industry & Outlook:
Growth momentum for the tractor industry was supported by positive sentiment in rural parts of the country, specifically the agri economy which is driven by (i) Very good monsoon (ii) Healthy reservoir levels (iii) record kharif production (iv) good rabi sowing (v) Continued high Central Government spending in Agriculture and Rural Development. On the back of these positive factors, it is expected that tractor demand will remain robust during the coming quarter as well.
For Auto, with many key indicators showing positive momentum, calendar year 2021 has started with strong momentum. However, some significant challenges do exist especially on the supply side and commodity prices.
The RBI expects GDP growth to move into positive territory in the December quarter itself albeit at 0.1 per cent. Further, rising bank credit growth and infrastructure investment oriented government final consumption expenditure (GFCE), amplified by an out-and-out “growth Budget” will provide valuable counter-cyclical support to GDP growth. The IMF now also estimates India to grow 11.5 per cent in the next financial year before settling at 6.8 per cent in 2022-23 - making India the fastest-growing large economy in the world in both the years.
Note: Translation of rupee to dollar is a convenience translation at the average exchange rate for the twelve month period ended 31st December 2020.
The Mahindra Group is a USD 19.4 billion federation of companies that enables people to rise through innovative mobility solutions, driving rural prosperity, enhancing urban living, nurturing new businesses and fostering communities. It enjoys a leadership position in utility vehicles, information technology, financial services and vacation ownership in India and is the world’s largest tractor company by volume. It also enjoys a strong presence in renewable energy, agribusiness, logistics and real estate development. Headquartered in India, Mahindra employs over 2,56,000 people across 100 countries.
Learn more about Mahindra on www.mahindra.com / Twitter and Facebook: @MahindraRise
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