Automobile major Mahindra & Mahindra (M&M) has posted a net loss for the quarter ended March. In actual terms, the loss amounts to Rs. 3255 crores. Analysts’ did expect a net-profit but is hit by a one-off loss, a loss happening only once over a while. This consolidated net loss is compared with a net profit of Rs.969 crore in the corresponding quarter last year. Analysts had projected that the company would make a profit of Rs. 441 crores, but against this projection, the company has incurred the above-said loss. Writing down of investment in SsangYong and some other international subsidiaries occurred, because of which the company’s net profit was particularly impacted. The company’s revenue came down 35% year-on-year to a level of Rs. 9005 crores during the quarter under review.
The key takeaways from the M&Ms quarter for earnings are as follows;
- As far as the dividend is concerned the board recommended Rs.2.35 per share.
- The second take away is outlook. Manufacturing sectors may see a slower recovery, the agriculture or farm equipment sector will be less impacted. Several positive factors like record Rabi production, higher government procurement, and timely announcement of higher MSPs are to come to the aid. One can expect a quicker recovery in rural India which is evident from tractor sales of the company in the month of May. Compared to this the urban segment may take longer to come back to recovery and normalcy. Note that the outlook is largely contingent upon the intensity, duration, and spread of the pandemic. Hence a smooth normalization and efficacy of policy measures will be significant to or decisive to any recovery in Financial Year 2021. The company said in a press release.
- The company’s major decision is not to infuse any fresh capital into SsangYong. It is re-examining the business outlook of other international subsidiaries concerning the current environment, to decide on future capital allocation.
- The next takeaway is that market share rises. There are tangible challenges of COVID-19 lockdown and continued to slow down in the economy. Still, the company manages to grow its market share in the less than 3.5-ton CV to more than48%. This is when the statistics are compared to the corresponding quarter previous year. Financial year operating profits drop is the next takeaway to consider. The company’s operating profits came down 26% from the previous year. The last- status quo on financial year operating margins remained at 14.2% for the FY 2020 despite the challenging pandemic.
