M&M’s quarterly profit rose 25% to Rs 4,588 crore. Cars do most of the work, rising costs have squeezed profits and farm operations have fallen into a slow season.
Mahindra & Mahindra’s latest effort appears to be a simple success at first glance. Revenue and profit both increased 25%. Consolidated revenue for the July-September quarter was Rs 57,553 crore as compared to Rs 46,106 crore in the same period last year. Profit was 45.88 billion rupees, compared with 36.73 billion rupees in the same period last year.
The numbers below tell a more complex story. One business is racing ahead, one has stalled, and rising costs are putting pressure on almost all businesses.
SUV engine
The automotive business is now clearly the group’s core business. M&M sold 3,30,896 vehicles during the quarter, an increase of 26% over the same period last year. Among them, there are about 183,000 multi-purpose vehicles. M&M remains India’s largest SUV manufacturer in terms of revenue market share, accounting for 24.3%.
The automotive business brought in revenue of 37,756 crore rupees, a growth of 39%, which is roughly equivalent to two rupees out of every three rupees in revenue of the group. Its profits rose 55% to 2,388 crore rupees, accounting for more than half of the group’s total profits.
Revenue is growing faster than the number of vehicles sold. This shows that buyers are opting for more expensive models and variants, which is good news for any car manufacturer.
Mr. Rajesh Jejurikar, Executive Director and CEO, Automotive and Agriculture, said, “The Automotive business performed strongly in the second quarter of 2027, while the Agriculture business continued to show strong resilience. SUV sales grew 26% year-on-year and maintained market leadership in revenue market share. The EV product range continued to show momentum, retaining the number one position in revenue market share in the first half of the year. Automotive consolidated PBIT margin grew to 8.8%, up 110% sequentially. PBIT margin increased by 20 basis points sequentially despite the sharp increase in commodity prices.”
Electric betting is gaining popularity
Electric vehicles have transformed from a side project to a real part of the business. M&M’s electric SUVs account for 30.1% of the electric SUV market in terms of revenue. Electric vehicle division MEAL sold 22,864 electric vehicles in the quarter, compared with 12,404 units in the same period last year. The increase is about 84%.
Small vehicles are also growing. M&M holds a 36.2% share of the electric three-wheeler market. Last-mile mobility unit LMM sold 53,103 vehicles, an increase of about 36%. Among light commercial vehicles under 3.5 tons, M&M occupies more than half of the market share, with pickup trucks such as Bolero accounting for 52.3%.
However, power growth comes at a cost. The profit margin of the standalone automotive business was 7.7%. Excluding electric SUVs, margins were 9.1%. The gap shows that even as sales grow rapidly, the cost of promoting electric vehicles remains high.
Pause on the farm
Tractors, M&M’s most reliable business over the long term, had a quieter quarter. Sales fell 6% to 1,16,027 units. Farm income fell 6% to 9,572 crore rupees and profit fell 9% to 1,053 rupees. Farm profit margins fell three percentage points to 16.8%.
The company blamed timing rather than weak demand. Tractor buying in India usually peaks during festive seasons. Conditions vary from quarter to quarter this year, causing some purchases to be postponed to this period. Even in the weak quarter, M&M still accounted for more than 4 out of every 10 tractor sales in India, with a market share of 41.5%.
Cost austerity
The most obvious caveat in the results is in the separate accounts. Revenue in the region grew 26% to Rs 44,282 crore. Operating profit (EBITDA) grew just 4% to Rs 6,718 crore.
To put it simply, every Rs 100 of sales now brings in operating profit of about Rs 15 compared to about Rs 18 a year ago. Executives pointed to sharp rises in commodity prices and global uncertainty. Steel, aluminum and other materials cost more, and not all of the increased costs are passed on to buyers.
There is some relief. Auto margins improved 0.8 percentage points from the previous quarter, so the squeeze may be easing.
Mr. Amarjyoti Barua, Group Chief Financial Officer, said: “The second quarter F27 reflects the strength of our diversified portfolio. Our business has demonstrated strong operational management and resilience despite significant headwinds in commodities and geopolitics. A strong balance sheet and cash generation also provide us with the flexibility to invest in future opportunities and create sustainable value.”
Apart from vehicles and tractors, M&M’s service business revenue grew by 18% to Rs 11,821 crore and M&M’s profit share also increased by 18% to Rs 1,147 crore.
Mahindra Finance’s loan book (AUM) grew 15% and M&M’s profit share grew 61%. Non-performing loans (GS3) were 3.42%. Tech Mahindra improved its operating (EBIT) margin by 2.6 percentage points to 14.8%, with M&M’s profit share rising by 33%. Mahindra Lifespaces’ housing pre-sales stood at Rs 1,100 crore, up 41%. Mahindra Holidays has 5,762 rooms and an occupancy rate of 76%. Mahindra Logistics’ revenue grew 24% to Rs 2,095 crore and returned to profitability.
M&M calls its smaller, fast-growing businesses “growth gems.” Their total profits tripled.
The bigger picture
M&M’s business footprint demonstrated its value during the quarter. When the tractor slows down, the car can compensate for this. When costs rose, finance and technology helped maintain overall costs. The group’s return on equity is 21% (annualized, year-to-date).
Dr Anish Shah, Group CEO and Managing Director, said: “Our second quarter F27 consolidated PAT growth of 25% reflects the resilience of our group and highlights the disciplined execution across the business. Automotive continued to grow on the back of strong consumer demand, while farm declined slightly due to changes in the festive season. Mahindra Finance maintained its growth trajectory, TechM showed acceleration in its transformation journey, while our Growth Gems Continuing its growth momentum, the group remains focused on laying the foundation for continued profitable growth.”