Tractor Sales Boost M&M’s Q2 Results, Stock Price Up

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Tractor Sales Boost M&M’s Q2 Results, Stock Price Up
Credit: © Reuters.

By Aditya Raghunath -- Auto major Mahindra & Mahindra Ltd. (NS: MAHM ) reported its results for the second quarter of 2020-21 on November 10. The numbers were in line with expectations with revenues going up 6% largely on the back of tractor sales. The stock was trading at Rs. 636, up 2.71% at the time of this report.

Revenues clocked in at Rs. 11,590 crore for the quarter. The company’s tractor sales rose by 31% to 89,597 units compared to the same period in 2019. This upside is not limited to M&M alone. India’s tractor industry saw sales go up by over 41% compared to 2019.

The jump in tractor sales saw M&M’s profit clock in at Rs. 1,311 crore compared to analyst expectations of Rs. 1,040 crore. While this quarter’s profit was a massive improvement from Q1 where the company posted a profit of just Rs. 68 crores, the numbers were 3% lower than 2019’s figures.

M&M has used the pandemic to increase operational efficiencies and that improved its EBITDA (earnings before interest, tax, depreciation, and amortization) to 17.8% from 14.1% in 2019.

However, the company’s other vehicle segment (passenger and commercial) remains under pressure declining 23% from 2019. Its commercial vehicles segment clocked sales of 23,936 units, 40.5% lower than 2019.

M&M expects tractor sales to continue well into the festive season in Q3.

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