Robust tractor sales boost M&M's Q4 earnings, mute analysts

Indian automobile manufacturer Mahindra & Mahindra’s (M&M) quarter ended March result surpass the estimates of the analysts. The higher revenue from the sale of farm equipment tractor counterbalances the decline in the automotive segment.

For the quarter ended March, the Net Profit of the company surged by 20 per cent to Rs 725.2 crore year-on-year basis which surpassed the estimates of Rs 606 crore. In the last quarter, the demand for the Tractor improved due to the festive season and it was also driven by the good crop production in the season of Rabi.

In the fourth quarter, growth was due to demonetisation and a ban on Bharat Stage III vehicles and hinted more vigorous FY18.

 Good monsoon forecasts, higher rural income and govt's push for the agri sector will boost the sale of the tractors in June ended quarter. 

The top line revenue surged by 2.4 per cent to Rs 12,011 crore. Analysts think that this growth was fuelled by the farm equipment segment which witnessed a rise of 15.3 percent. 

The weak performance of the automotive segment contracted the profitability margin by 160 basis points and weakness in the margins was balanced by the farm equipment segment where the margins expanded by 180 basis points. The EBITDA also slipped by 13 percent.