M&M net profit falls on GST impact but tractor sales rise
Firm to make new launches in utility vehicles
Mahindra & Mahindra Ltd on Friday posted a biggerthan-estimated 20% decline in June quarter net profit as passenger car sales slowed ahead of the transition to the goods and services tax (GST) in July, countering a jump in tractor sales that indicate a revival in rural demand.
The maker of Shaktimaan tractors and Scorpio utility vehicles (UVs) said profit fell to ₹765 crore in the three months, compared to ₹961 crore a year earlier. Profit would have been higher by ₹96 crore but for the impact of GST, the company said.
Mahindra’s net sales increased 3.2% to ₹12,335.56 crore, boosted by a 12% jump in revenue from the farm equipment sector.
Revenue from the automotive sector declined 2%. More than one out of every three rupees earned by the company came from the farm equipment sector.
Mahindra had been expected to post a profit of ₹850.90 crore on net sales of ₹11,265.90 crore, based ona Bloomberg poll of 16 analysts. In the three months to June, Mahindra’s passenger vehicle sales in the domestic market dropped 6% from a year ago to 55,785 units.
Sales of tractors advanced 13% to 81,178 units—an indication of rural demand looking up on the back of plentiful monsoon rain.
Two consecutive years of good rains and crop loan waivers in key states will push tractor sales to a record high in 2017-18, Crisil Research said in a August 1 note. Sales of tractors may touch a new peak of 650,000 units in 2017-18, about 12% higher than the 580,000 units sold in 2016-17, the ratings agency said.