Above est.; Volumes grow 7.8% YoY to 54.9k
Tractors surprise positively; UV volumes in line with estimates
* M&M’s tractor volumes surged 65% YoY to 24.5k units (v/s est. 21.5k units). We have factored in 6.5% volume growth for FY21E, implying 14% residual growth or 29.4k units.
* UVs (incl. pick-ups) stood flat YoY at 29.9k units (in-line). Domestic passenger UVs grew ~3% YoY while domestic pick-ups grew 9% YoY. We estimate UV volumes to decline 15% in FY21E, implying 14.9% residual growth or run-rate of 36.8k units.
* 3W volumes plunged 94% YoY to 307 units.
* Commenting on the performance, Mr. Veejay Ram Nakra, Chief of Sales & Marketing, Automotive Division of M&M Ltd. said, “At Mahindra, we continue to see good recovery in demand both for SUVs and Pick-ups in the Small Commercial Vehicles segment. For the month of August, we have registered growth in both SUVs and Pick-ups. We have been able to meet the uplift in demand by managing the supply chain challenges and going forward will continue to keep our focus on it.”
* Commenting on the performance, Hemant Sikka, President – FES Sector, M&M Ltd. said, “The Tractor industry growth continues to remain strong in August. This is primarily on account of continued positive sentiment, due to increase in Kharif sowing area, thereby indicating a bumper harvest, bountiful monsoon, good rural cash flows and base effect. We expect rural sentiments to remain positive and translate into robust tractor demand as we move into the festive period. In the exports market, we have sold 955 tractors, a growth of 1% over last year.”
* The stock trades at core P/E of 12.8x FY22E S/A EPS and 1.3x core P/B. Maintain Buy.
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