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Takeaways from M&M results

BS Reporter/Mumbai 08 Aug 12 | 03:02 PM

A sharp jump in the automotive segment resulted in Mahindra & Mahindra posting a 20% profit growth over previous year. Markets have reacted positively to the company’s results pushing the stock up by 3.9% at Rs 723.

Following are the key takeaways from the company’s results:

  • Net profit grew by 20% from Rs 604.88 crore in June 2011 to Rs 725.84 crore in June 2012. Market expectation from the company was a profit of Rs 621.5 crore.
  • Net sales grew from Rs 6727.08 crore to Rs 9367.39 crore during the same period, a growth of 39%.
  • Lower profit growth is on account of lower operating margin which fell from 13.3% to 11.8% and higher interest outgo.
  • Operating profit stood at Rs 1,109.4 crore as compared to Rs 895.4 crore in the previous year, a growth of 23.9%.
  • Finance costs saw a sharp jump of 75% from Rs 26.23 crore to Rs 46.02 crore.
  • Stock-in-trade which moved up from Rs 718.89 crore to Rs 2271.04 crore also contributed to lower operating margin.
  • Automotive segment witnessed a sharp growth of 62.8% taking their sales from Rs 3855.90 crore to Rs 6278.65 crore. However,
    product mix resulted in lower growth of EBIT (Earnings before interest and tax) of 33.55% from Rs 413.89 crore to Rs 552.76 crore.
  • Farm equipment division however, was flat with sales crawling from Rs 2857.07 crore to Rs 3078.29 crore. EBIT moved higher from Rs 457.41 crore to Rs 482.42 crore.
  • With a drought like situation in several states and overall gloom in the economy, Mahindra & Mahindra has given a cautious and watchful outlook for the future.

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