Tractors and better cars drive M&M’s Q1 net profit, but the future is electric


  • M&M’s net profit increases fivefold to 2,196 crore in the first quarter due to strong tractor sales and price increases.
  • Although the company said the chip shortage is slowing deliveries, it is still on top of more than 1.4 lakh orders, with the Scorpio-N by a huge margin.
  • The company, like others, is also preparing for an electric future with the announcement of five new electric SUVs, scheduled for August 15.

Mahindra & Mahindra, India’s largest tractor and auto company, Friday reported a more than 5-fold jump in its consolidated net profit to ₹2,196 crore year-over-year, aided by a double increase in tractor sales and price increases.

M&M also posted a healthy 48% year-over-year revenue growth, with the auto and tractor segments driving growth. While the auto segment reported an increase of 74%, the tractor segment grew 18% over the same period. The three consecutive blockbusters for the auto segment – the Thar, XUV700 and the Scorpio-N – have likely helped the auto giant this quarter.

While profits declined 1.8% on a sequential basis, sales grew at a healthy 9.6%, indicating continued sales growth.

ParticularitiesQ1 FY23Q4 FY22Q1 FY22
Revenue₹28,412 crore₹25,934 crore₹19,172 crore
Net profit₹2,196 crore₹2,237 crore424 crore
Net margin7.7%8.6%2.2%

Source: Company Reports

Automotive and agricultural segments remain the main players in the M&M stable. More specifically, the auto segment benefited from volume growth thanks to a new model mix, while the agricultural segment benefited from a recovery in demand and a cooling of raw material prices.

Tech Mahindra, the group’s IT services arm, has witnessed continued deal gains, but as other IT companies have realized, margins have come under pressure, the company said. Overall, this is how each segment of M&M performed in Q1 FY23:

SegmentQ1 FY23QoQ changeYoY change
Automotive₹670 crore10%727%
Farm supplies₹1,114 crore50%-6%
Financial services₹296 crore-65%114%
Hospitality₹48 crore200%400%
Property-₹34 crores42%-42%
others₹304 crore29%94%

Source: Company Reports

In the auto segment alone, Mahindra says it has more than 1.40,000 outstanding bookings – 79,000 of those are due to the XUV700 alone, with the Thar a distant second with 25,000.

Unsurprisingly, then, Mahindra blamed the semiconductor chip shortage for the delays — and this is driving up costs for both consumers and the company itself, which has resorted to price hikes and feature elimination after the initial announcements.

“In M&M, one of the main reasons for the long wait times for vehicle delivery is that the availability of semiconductors was delayed by a drop. Those who lament the demise of a global supply network ignore the fact that the disruption lies in the China-dominated global supply network rather than the true global supply chain,” the company said.

Still, the company managed to increase volumes:

ParticularitiesQ1 FY23QoQ changeYoY change
Total number of vehicles sold1,49,803-2%74%
Total number of tractors sold1,17,41363%18%

Source: Company Reports

Looking beyond the ‘best quarter ever’ – M&M unveils 5 new EVs this month

During the investor presentation, Mahindra underlined that gasoline prices have become a source of headache for consumers, which is why the automaker has revealed that it will unveil its EV strategy on August 15. This includes five new electric SUVs, and reports suggest the company is recruiting 900 engineers to work on its electric vision in Chennai’s Mahindra Research Valley.

Anyway, EVs are the future and Mahindra would do well to be an active participant rather than relying on the old eVerito and e2o plus cars, which are not only obsolete but handily beaten by the Tata, among others. Nexon.

While tractors are his bread and butter and electric is the future, M&M is not talking about electric tractors yet. For now, electric cars will have to do it.


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