Mahindra and Mahindra (M&M) reported record-high tractor sales in the first quarter of FY25, with the company forecasting over 5% growth in domestic tractor sales moving forward. This positive outlook comes despite cautious optimism regarding the impact of the monsoon season on agricultural demand.
Key Highlights:
- Tractor Sales:
- Record sales of 1.2 lakh units in Q1FY25, a 5% increase from 1.14 lakh units in Q1FY24
- Market share grew by 180 basis points YoY to 44.7%
- Growth Projections:
- M&M expects over 5% growth in domestic tractor sales
- Factors contributing to positive outlook include favorable trade conditions, strong price realisations in mandis, and a good monsoon forecast
- Economic Indicators:
- Positive outlook supported by increased government spending in the rural sector and the upcoming Navratra season in the second half of FY25
Financial Performance:
- Core Tractor Margins:
- Margins expanded by 110 basis points YoY, reaching nearly 20%
- Improvement attributed to reduced expenses and lower commodity costs
- Revenue and Profit:
- Farm consolidated revenue remained flat YoY at ₹9,711 crore, impacted by pressures in international markets
- Overall net profit declined 5% YoY to ₹2,613 crore
- Revenue from operations increased 12% YoY to ₹27,039 crore
Summary Table:
| Metric | Q1FY25 | Q1FY24 | Change (%) |
|---|---|---|---|
| Tractor Sales (units) | 1.2 lakh | 1.14 lakh | +5% |
| Market Share (Tractors) | 44.7% | – | +180 bps |
| Core Tractor Margins | 20% | – | +110 bps |
| Farm Revenue (₹ Cr) | 9,711 | – | – |
| Net Profit (₹ Cr) | 2,613 | – | -5% |
| Revenue from Operations (₹ Cr) | 27,039 | – | +12% |
M&M’s management highlighted that while the domestic tractor market shows promise, the international segment, particularly in the US, has faced challenges. The US market has seen a decline in tractor volumes over the past 8-10 quarters, partly due to elevated interest rates reducing purchasing power
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