Tractor segment to grow over 15% in Q4; CVs struggling, says M&M
“We expect the industry to grow at over 15% in Q4, which will take us to an annual expected growth rate of around 7%,” Rajesh Jejurikar, Executive Director & CEO (Auto and Farm Sector), M&M said during the company’s post earnings media conference call.
This optimism comes on the back of good reservoir levels, smooth rabi sowing, a strong kharif production growth, and hike in MSP of key rabi crops namely wheat and mustard. The terms of trade also remain favourable, he said.
In CY2024, the tractor segment clocked retail sales of 8.94 lakh units, marking a growth of 2.55% over 8.71 lakh units sold in CY2023, according to the Federation of Automobile Dealers Associations (FADA).
The tractor segment touched new all-time highs during January-December 2024 period, the industry body said.
Mahindra reported an increase in domestic market share and expansion of margin in Q3 FY25 for the farm sector business.
However, Amarjyoti Barua, Group Chief Financial Officer, M&M said the international business is weak, driven by macro headwinds in export markets. “It's important for us to look at where there is a structural change in the market versus a temporary headwind. That is an evaluation, especially in our farm businesses, that we will continue to do in the fourth quarter,” he said.
Commercial Vehicles
Jejuriker said he expects a “small, single digit growth” in LCVs (less than 3.5 T) in Q4.
“We were hoping to see a revival in Q3, but it is too early to say whether that is playing out in Q4. Right now, it is not showing signs of a very big revival yet,” he said.
A weak demand is also being seen for the M&HCV segment. Jejuriker said it is quite “surprising”, because it has been muted for some time.
He hopes the upcoming investments into infrastructure development will stimulate a pickup in demand.
As per the retail sales data by FADA, performance in the CV segment during CY2024 was subdued amid election-driven uncertainty and reduced infrastructure spending. It reported a minimal year-on-year growth of 0.07% to clock 10.04 lakh units during the year.
Q3 Consolidated Performance
In the October-December 2024 quarter, Mahindra has reported a 20% growth in consolidated Profit After Tax (PAT) at INR 3,181 crore over the corresponding quarter of the previous fiscal. The company had posted a consolidated PAT of INR 2,658 crore in Q3 FY 2023-24.
Revenue for the quarter jumped 17% year-on-year to INR 41,470 crore from INR 35,299 crore a year earlier.
“Auto and Farm delivered solid performance on market share and margins, on the back of focused execution. The transformation at TechM is gathering momentum," Anish Shah, Managing Director & CEO, M&M said.
