The vehicle maker Mahindra & Mahindra declared their Q1 FY21 results on Friday. The company reported a 97% fall in net profits year-on-year (YoY). Last June, net profits were accumulated to be Rs 2260 crore against Rs 68 crore reported this quarter. This performance is below what the market estimated.
| Q1 FY21 | Q4 FY20 | Q1 FY20 | QoQ | YoY | |
| Revenue | 16,321 | 20,499 | 26,289 | -20.3% | -40% |
| Profit | 68 | -1,822.6 | 2260 | 103% | -97% |
About the Company
Mumbai headquartered, Mahindra & Mahindra (M&M) is an Indian multinational automobile manufacturing corporation. It was established in the year 1945 and is a part of Mahindra Group. Being a market leader, it dominates the tractor manufacturing market. Its major competitors in the Indian market include Tata Motors and Maruti Suzuki. Currently, the company has a market capitalization of Rs 74,666 crore.
Quarter Review and future
The coronavirus pandemic and the national lockdown has had a severe effect on the automobile sector. The shop was forced to close which reduced the sales number drastically. The company sold 27,565 units of vehicles, 78% lower than the previous year. Also, only 64,140 units of tractors were sold, 22% lower than what was reported in June 2019.
“After the first-ever zero sales in the month of April, the industry is finding its way back. The company’s key brands which have a strong rural bias saw good demand in the month of June. The timely relaxation of the lockdown for the agricultural sector along with positive rural sentiment led to good sales numbers for tractors during the quarter despite the supply chain issues, showing a positive growth rate in May and June 2020.” the firm said in a release.
The next set of challenges for the company comes in this COVID era. Sales of tractors are still better because of the positive rural sentiment due to a good harvest expectation. After the unlock procedure, the demand for rural units has increased. It has to deal with the challenge to ramp up the production without compromising on social distancing measures. The automobile sector is in a revival mode since the lockdown has been lifted. You can read more about this here.
