Weak tractor sales weigh on Mahindra & Mahindra's Q3 results
BENGALURU (Reuters) - Indian automaker Mahindra and Mahindra posted a smaller-than-expected rise in third-quarter profit on Wednesday as weak demand for its profit-boosting tractors offset sport utility vehicle (SUV) sales.
The 'Scorpio' SUV-maker's standalone profit after tax rose 60.6% to 24.54 billion rupees ($295 million) in the three months to Dec. 31, missing analysts' estimate of 25.12 billion rupees, per LSEG data.
While Mahindra's tractors and farm equipment sales form only about a third of total revenue, they are far more profitable than its auto business, which comprise close to two-thirds of the topline and includes the sale of SUVs and commercial vehicles.
"Tractor industry contracted on back of last year’s high base, weather vagaries and lower reservoir levels," Mahindra's auto and farm sector chief executive Rajesh Jejurikar said in a press release.
India's largest tractor maker by sales said its farm equipment segment revenue grew a mere 0.5%, while revenue at the auto segment grew 24%.
Overall revenue rose around 17% to 252.89 billion, coming short of analysts' expectation of 255.14 billion rupees.
Sales of tractors were down 4% during the quarter, while SUV sales rose more than 30% on the back of festive season demand.
Mahindra's shares fell 1% after the results.
($1 = 83.0712 Indian rupees)
(This story has been refiled to remove an extraneous word in paragraph 1)
(Reporting by Nandan Mandayam and Varun Vyas in Bengaluru; Editing by Sonia Cheema)
