Mahindra & Mahindra Limited (M&M) is an Indian multinational automotive manufacturing corporation headquartered in Mumbai. It was established in 1945 as Mahindra & Mohammed and later renamed as Mahindra & Mahindra. Part of the Mahindra Group, M&M is one of the largest vehicle manufacturers by production in India. Its unit Mahindra Tractors is the largest manufacturer of tractors in the world by volume. It was ranked 17th on a list of top companies in India by Fortune India 500 in 2018. Its major competitors in the Indian market include Maruti Suzuki and Tata Motors.
Mahindra & Mahindra Ltd is one of the most diversified automobile company in India with presence across 2-wheelers, 3-wheelers, PVs, CVs, tractors & earthmovers.
It also has presence across financial services, auto components, hospitality, infrastructure, retail, logistics, steel trading and processing, IT businesses, agriculture, aerospace, consulting services, defence, energy and industrial equipment through its subsidiaries and group companies.
Quarterly Earnings Walkthrough
Mahindra & Mahindra Ltd posted a 14.5% rise in standalone net profit in the December quarter but the figure lagged Street expectations because of a one-time charge.
Profit in the three months ended 31 December rose to ₹1,528 crore, from ₹1335 crore a year earlier, missing the ₹1,746 crore consensus estimate in a Bloomberg poll of analysts. Revenue at the maker of Bolero and XUV700 SUVs climbed 41% from a year earlier in the December quarter to ₹21,654 crore.
A one-time impairment provision of ₹629 crore, of which ₹501 crore was towards re-evaluation of the company’s truck and bus division, impacted quarterly net profit.
M&M’s revenue growth was driven by its automotive business and stronger-than-expected performance in the farm equipment sector. On a sequential basis, the auto segment accounted for 68% of revenue, compared to 71% in the September quarter, while the farm segment contributed 29% compared to 26% in the September quarter.
The company expects strong traction for its new SUV launches, including the XUV700, Scorpio-N, Thar rear-wheel drive and its maiden electric SUV, the XUV400, as it moves to meet an orderbook of 266,000 vehicles. However, supply chain disruptions led to airbag sensor shortages, impacting a few models.
Mahindra has also raised its growth outlook for tractors to 10% for 2022-2023, from its earlier estimates of 5%, on the back of improving terms of trade for farmers, high government spending in the second half of the year, and four years of normal monsoon. The company expects tractor volumes to breach the 900,000-unit mark by the end of this fiscal year.
M&M share price is attempting to achieve its 161.8% retracement level but faces heavy resistance at the Rs 1300 mark. The stock price appears to be overbought but receives crucial support at the Rs 1200 mark. The price has overextended above the 200-day exponential moving average which makes it expensive. The weekly MFI is at 44 points which makes the stock cheap for a short-term rally. Considering the overbought nature of the stock, it is due for a correction, if the price breaks below the 1200 level, traders can take directional short trades on this stock.
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