M&M Q3 net profit soars 78% on strong sales

Auto major Mahindra & Mahindra on Wednesday reported 77.59 per cent increase in its net profit for the quarter ended December 31, 2010, at Rs 734.68 crore (Rs 7.34 billion) on account of robust demand and various cost saving measures.

The company had posted a net profit of Rs 413.70 crore (Rs 4.13 billion) in the corresponding period previous year, Mahindra & Mahindra said in a filing to the Bombay Stock Exchange.

The total income during the third quarter of this fiscal also surged by 36.11 per cent to Rs 6,121.09 crore (Rs 61.21 billion) from Rs 4,497.12 crore (Rs 44.97 billion) in the year-ago period, it added.

"The significant growth in the profit of the company, despite the relentless increase in material costs is due to a good volume performance by both vehicles and tractors, tight control on expenses and prudent financial management resulting in lower interest costs," M&M said.

During the quarter, the company sold 56,211 units of utility vehicles in the domestic market, enjoying 62.2 per cent share in the segment.

The domestic sales of 'Mahindra Swaraj' tractors grew to 55,649 units from 41,074 units in the same quarter last fiscal, the company said.

While vehicle exports jumped by 50.71 per cent to 5,020 units, tractors exports climbed by 10.09 per cent to 3,120 units, it added.

Commenting on the outlook, M&M said, "While the demand for the company's products remains robust, the recent hardening in the prices of commodities and oil causes a degree of concern".

"The measures adopted by the Reserve Bank of India to combat inflation will necessarily result in tighter liquidity and further possibility of interest costs moving upwards."

The company, however, said the overall outlook for the future remains positive. Reacting to the result, the shares of the company were trading 4.67 per cent up at Rs 658 a piece during late- afternoon trade on the BSE.

Image: Mahindra Logan