Mahindra & Mahindra Q2 preview: Revenue growth expected; profits are likely to remain low
Mahindra & Mahindra (M&M) is poised for strong revenue growth in the second half of FY25, led by its tractor and auto components segments. Analysts are predicting year-on-year (YoY) revenue growth of around 10-13 percent, though net profit may remain flat or witness little change due to mixed operating factors. Here’s what major brokerages are predicting for the automaker’s upcoming quarterly results.
Outlook’s revenue and profit
As per Zee Business estimates, M&M’s revenue for Q2 is expected at Rs 27,262 crore, showing a YoY increase of 12.1 percent. EBITDA stood at Rs 3,950 crore, an impressive 34.7% jump YoY, while margins improved to 14.5% from 12.1% last year. Net profit, however, may come down to Rs 3,450 crore. Notably, Zee’s ratio excludes revenue from underlying assets in its revenue calculations, allowing for a sharper focus on core performance.
Analysts expect M&M’s revenue to increase YoY, mainly driven by strong performance in both its auto and tractor segments. According to Nuvama Institutional Equities, revenue is likely to grow by 10 percent YoY, likely to reach Rs 26,815 crore, with a significant increase in EBITDA by 21 percent to Rs 3,704 crore. However, net profit is expected to see moderate growth, rising by around four per cent to Rs 3,383 crore, as higher costs may offset higher profits.
Category Performance
Kotak Institutional Equities projects YoY revenue growth of 13 percent, while tractor and auto parts post eight and 15 percent gains, respectively. However, Kotak expects a slight dip in margins due to a combination of weak segment mix and the impact of fixed costs, which may reduce EBITDA margins by around 30 basis points (bps) quarter-on-quarter (QoQ).
Motilal Oswal sees 13 percent increase in vehicle volume and six percent increase in tractor sales. However, they expect margin compression due to a change in product mix, which may reduce the share of farm equipment by 100 bps to 17.5%.
YES Securities estimates overall volume growth at 7.4 percent YoY, despite a quarter-on-quarter dip in tractor volume. They forecast a revenue rise of 13 percent to Rs 27,530 crore, and EBITDA of 14.1 percent, marking an improvement of 150 bps YoY. However, adjusted profit after tax (PAT) of Rs 3,490 crore suggests a modest profit growth.
Overall, M&M’s Q2 results will show strong revenue from key segments, however profitability may be reduced due to mixed margins and tight fixed costs. Investors will be looking for updates on M&M’s production increase and the outlook for demand in both automotive and agriculture, especially as new models are introduced in the SUV segment.
