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Thursday October 26, 10:02 PMIndia Mahindra Q2 net jumps, shares soar to recordMUMBAI, Oct 26 (Reuters) - India's biggest utility vehicle and tractor maker, Mahindra & Mahindra Ltd. , said on Thursday second quarter net profit jumped 146 percent as exports and tractor sales rose, sending its shares to a record high."The company expects to maintain a healthy market performance in the second half of the year," Mahindra said in a statement. Tractor sales grew 27.5 percent from a year earlier in the domestic market and exports rose 64 percent, while local sales of utility vehicles grew an annual 11 percent, led by a 20 percent rise in sales of Scorpio, its top-selling model. Operating margins, a key measure of profitability, rose to 13.44 percent from 11.39 percent a year earlier. "These are excellent numbers, on the back of high value tractor and utility vehicle sales," said Ramnath Subramaniam, Vice President (Research) at SSKI Securities. "The operating margin may not be sustainable, and may fall to around 12.5 percent for the next two quarters, but the company remains our top pick in the sector," he said. Mahindra's shares rose as much as 8.3 percent to a record high of 748 rupees after the results, before closing up 5.9 percent at 730.90 rupees, which was a record close. The strong sales helped it overcome high raw material costs, which analysts say are putting pressure on vehicle manufacturers, although metal prices have eased since the April-June quarter. The company's total expenditure rose 25 percent from a year earlier. Mahindra, which has about 30 percent of India's tractor market, the world's biggest by volume, said net profit rose to 3.86 billion rupees ($85.2 million) in its fiscal second quarter to end-September from 1.57 billion reported a year earlier. That beat a median forecast of 2.02 billion rupees in a Reuters poll. The company's net profit was helped by higher "other income" of 729.1 million rupees in the quarter compared to 294.4 million a year ago. The company said it earned an exceptional post-tax profit of 884 million rupees from sale of a part of it holdings in its subsidiary, Tech Mahindra Ltd . The passenger-vehicle market in Asia's fourth-biggest economy is forecast to nearly double to 2 million units by 2010, boosted by rising incomes, affordable loans and new product launches. Demand for heavy trucks in India's $5 billion bus and truck industry is also rising as infrastructure improves. Formed in 1945 to make Chrysler Jeeps in India, Mahindra has nearly half of India's market for utility vehicles. It is the world's number-four tractor maker and aims to be at the top in five years. Mahindra has a joint venture with China's Jiangling Motors Co. , and will sell tractors in Iran after entering into an agreement with ITMCo (Iran Tractor Manufacturing Co) earlier this month. Mahindra acquired a controlling stake in one of Germany's leading auto parts manufacturers, Jeco Holding AG in September, and has an $80-million joint venture with Navistar Inc.'s International Truck and Engine Corp. to make 50,000 medium and heavy trucks a year from 2007. It will also make Logan sedans with France's Renault from 2007. ($1=45.3 rupees) |
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