MUMBAI (Reuters) - India's biggest tractor and utility vehicle maker, Mahindra & Mahindra Ltd., said on Wednesday quarterly net profit rose an expected 3 percent as tractor sales and strong exports offset high raw-material costs.
Mahindra, which has about 30 percent of India's tractor market, the world's biggest by volume, said net profit rose to 2.42 billion rupees in its fiscal third quarter to end-December from 2.34 billion reported a year earlier.
It said net sales rose 17 percent to 25.76 billion rupees from 22.07 billion a year earlier.
That compared to a Reuters poll forecast of a net profit of 2.42 billion rupees on net sales of 26.73 billion.
Cost of raw-materials rose 7 percent to 17.15 billion rupees, but operating margins held steady at just over 12 percent.
"They should be able to maintain margins at these levels, as they have raised prices on some products and their subsidiaries are doing well," said Huzaifa Suratwala at Emkay Research, who has a 'buy' rating on the stock.
Mahindra's full-year net profit is forecast to rise 39 percent to 9.3 billion rupees, according to Reuters Estimates.
"All other factors remaining equal, we expect to maintain margins at this level, but we've seen a lot of volatility in steel prices and oil prices, and they will have an impact," Executive Director Bharat Doshi said.
Mahindra shares ended down 2.8 percent at 900.20 rupees in a weak Mumbai market.
Its shares, valued at $4.8 billion, rose 33 percent in the December quarter, beating a 2.8 percent gain for the sector index and a 10.7 percent rise on the benchmark.
LOGAN LAUNCH
Mahindra, which has nearly half the market for utility vehicles, has a deal with France's Renault to make the Logan sedan for sale in India. It also has a separate deal to build a plant to assemble 500,000 cars a year.
Nissan Motor Co. is close to joining the alliance.
Mahindra will also make trucks and buses in a joint venture with Navistar Inc.'s International Truck & Engine Co. It is building a new $564 million plant in Maharashtra with an initial annual capacity to make 250,000 units.
Mahindra, the world's fourth-biggest tractor maker, sold 71,805 units in the quarter, up 14 percent from a year earlier.
Mahindra bought German auto parts firm Schoneweiss & Co. GmbH in December and is in talks with Romania to buy state-owned Tractorul Brasov.
It also signed a deal with Global Vehicles USA Inc. to distribute its sport utility vehicles and pick-ups from 2007.
source: reuters Wed Jan 31, 2007 4:06 PM IST
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