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Mahindra & Mahindra Q1FY22 Result Analysis

Mahindra & Mahindra Q1FY22 Result Analysis

Published on 12 August 2021 Views 22 Comments 0

Q1FY22 Consolidated Highlights

  • Revenue from operations in Q1FY22 were 19,172 crores. Revenue saw a growth of 17.5% YoY but also witnessed a decline of (-10.6%) QoQ.
  • EBITDA for Q1FY22 stood at Rs. 1,184 crores, posting a decline of (-38.4%) QoQ and (-71.8%) YoY.
  • EBITDA margin stood at 60% in Q1FY22, the same for Q1FY21 was 12%. Q4FY21 EBITDA margin was 20%.
  • Profit Before Tax stood at Rs. -967 crores. PBT was Rs. -83 crores during Q1FY21 and was positive at Rs. 1,625 crores in Q4FY21.
  • Profit after tax turned positive to Rs. 424 crores as the company faced a loss of Rs. 98 crores during Q1FY21. The PAT decline by (-60.4%) when compared on QoQ basis.

Q1FY22 Standalone Highlights

  • Standalone revenue in Q1FY22 was 11,763 crores. Revenue saw a growth of 110% YoY but also witnessed a decline of (-12.9%) QoQ.
  • EBITDA for Q1FY22 stood at Rs. 1,837 crores, posting a decline of (-4.3) QoQ and a growth of 171.3 % YoY.
  • EBITDA margin stood at 16% in Q1FY22, the same for Q1FY21 was 16% and for Q4FY21 EBITDA margin was 14%. The standalone business has shown a stable EBITDA margin trend during past few quarters.
  • Profit Before Tax stood at Rs. 1,128 crores. PBT saw a huge growth as it was only Rs. 126 crores in Q1FY21. On YoY basis, the PBT witnessed a growth of 196.8%.
  • Profit after tax stood at Rs. 856 crores, showing huge growth on YoY and QoQ basis.

Business Highlights

  • The company has taken price increase in tractors during July at close to Rs. 19,000.
  • The company has faced high inflation since last months. From Mar-20 to Jun-21, Copper Prices have rose 86% and HR Steel prices have increased by 77%. Platinum and Rhodium prices have increased by 47% and 86% respectively.
  • The company is also facing semi-conductor shortage issues. Freight costs have increased too.
  • Management expects that the inflation in commodities will soften from Q3FY22.

FES Highlights

  • The FES revenues grew by 7% on QoQ basis and 59% YoY to Rs. 5,319 crores.
  • Volume growth for the same was 6% QoQ and 52% YoY.
  • The EBIT margin for the segment decline by 170 bps QoQ to 20.3% showing pressures due to commodity price increase.
  • The segment posted highest ever profit before tax at Rs. 1,188 crores.
  • Demand drivers for the tractor are present but management seem conservative in giving out growth guidance due to higher base.
  • The tractor market share reached 41.8% which was highest in last 2 years.
  • Inventory currently is at 30 days.
  • All the FES subsidiaries have posted profit during Q1FY22.
  • Due to delayed monsoon in UP and eastern markets, the southern market is doing better currently.
  • The company sees good growth in farm machine in next 3 years.

Automotive Highlights

  • Automotive revenue decreased by (-23%) QoQ due to as lockdown affected volumes which were down by (-20%) QoQ.
  • EBIT margin of automotive business decreased by 330 bps QoQ to 1.7%. The reasons for the same were commodity price pressures and negative operating leverage.
  • The auto business has strong bookings.
  • The market has improved in UV segments which is a strong focus point of the business.
  • Volumes and performance was impacted due to lockdowns in many key regions.
  • The time in lockdown was used to build inventory at 80% of the optimum level.
  • Order books: Thar-39k+ with 10 months waiting period. XUV 300-10k+ bookings with 2 months pipeline. Bolero has 4k+ bookings with 1 month pipeline.
  • Bookings for XUV 700 would start from Q2FY22 onwards and deliveries will begin from Q3FY22 onwards.
  • The production of XUV 700 has not been impacted due to semiconductor shortages.
  • The key issues continued to be commodity price increase and semiconductor shortages. The management expects the semiconductor shortage to continue for 3 quarters.
  • The company has lined up 23 new products till 2026 which include nine SUVs.
  • The company has sold 30k E3W in which the company commands a strong 50% market share.
  • The passenger segment is yet to pick up for EV 3W.

Mahindra & Mahindra Financial Services

  • The financial services segment is hit hard in this quarter.
  • The NPA provisioning stood at Rs. 2,517 crores.
  • The company suggests that the GNPA is expected to improving in the following periods.
  • GNPA has increased from 9% to 15%.
  • Capital adequacy ratio stood at 24%.

Tech Mahindra

  • The business  has witnessed lots of traction in cloud, data sciences, high tech manufacturing and healthcare
  • The total contracts have increased to $850 million.
  • The margins of the company have been improving too.
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