Indian Automaker Mahindra's Q3 Profit Rises On SUV, Tractor Demand

Indian automaker Mahindra and Mahindra Ltd reported a 15% rise in third-quarter profit on Friday, helped by strong demand for its new range of sports utility vehicles (SUV) and tractors, but flagged concerns about shortage of certain components.

Mahindra, known for XUV, Thar and Scorpio cars, said profit rose to Rs. 1528 crore ($185.2 million) in the three months that ended December 31, from Rs. 1335 crore.

India's car makers are recovering from the lows of the pandemic with easing chip shortages and falling commodity prices.

There is still some residual impact of the semiconductor issue, Rajesh Jejurikar, executive director of auto & farm sectors, said in a media conference.

"We do have an issue right now on the availability of airbags and sensors, which is impacting our ability to produce some of the vehicles like Scorpio and XUV 700," Jejurikar added.

Input costs, which account for three-fourths of total expenses, jumped 53%.

However, these costs fell over 10% sequentially, suggesting that commodity costs are cooling.

Sales of tractors rose 14%, while volumes in the auto segment jumped 45%, Mahindra said in a statement, adding that both the businesses hit record third-quarter volumes.

The company had more 266,000 pending orders for SUVs as on Feb. 1, reflecting sustained strong demand.

Mahindra's revenue from operations jumped 41% during the quarter to 216.54 billion rupees.

Top carmaker Maruti Suzuki India, which holds more than 40% share in the country's car market, beat quarterly profit estimates, while Tata Motors posted a profit for the first time in two years.

Mahindra said it recorded a one-time charge of 6.29 billion rupees in the quarter due to impairment provisions on a long-term investment and some assets.