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CORRECTED-UPDATE 1-India's Mahindra beats Q2 net expectations, margin slips on tractor slump
October 25, 2012 / 9:41 AM / in 5 years

CORRECTED-UPDATE 1-India's Mahindra beats Q2 net expectations, margin slips on tractor slump

(Corrects ‘June-September’ to ‘July-September’ in paragraph 2)

* Q2 net profit up 22 pct on strong SUV sales

* Profit 9.02 bln rupees vs expected 8.4 bln

* Tractor sales down 14 pct, car revenue up 58 pct

MUMBAI, Oct 25 (Reuters) - Mahindra and Mahindra Ltd , India’s biggest SUV manufacturer, beat analysts’ estimates with a 22 percent rise in net second quarter profit as its car sales outperformed the market, but margins were hit by a fall in tractor sales.

Mahindra, the world’s biggest tractor maker by volume, said its domestic tractor sales fell 13.8 percent in the July-September quarter, hit by cooling economic growth and lacklustre monsoon rains, dragging the company’s operating margin down to 11.4 percent from 12 percent a year ago.

“Tight macroeconomic and political constraints at home and worries about a second global recession have taken a heavy toll on the Indian economy,” the company said in a statement. “The current economic situation is quite challenging.”

Mahindra said on Thursday net profit for the September quarter was 9.02 billion rupees ($168 million), against 7.37 billion rupees a year earlier.

Net sales rose 33 percent to 96.59 billion rupees.

Analysts, on average, had expected profit of 8.40 billion rupees on revenue of 95.72 billion rupees, according to Thomson Reuters I/B/E/S.

Mahindra, which controls South Korean car maker Ssangyong Motor Co Ltd, said revenue from automotive sales jumped 58 percent in the quarter, as surging demand for SUVs helped the company defy the gloom in India’s car market.

The flagship company of the $15.4 billion Mahindra Group, the motor firm builds every other SUV sold in India and accounts for 40 percent of the country’s tractor market.

Shares in the automaker, valued at around $7.5 billion by the market, extended gains to rise as much as 3.1 percent after the results were released, compared with a flat Mumbai market .

“It was expected that the tractor business would drag down margins on lower volumes,” said Jinesh Gandhi, automotive analyst at Motilal Oswal Securities in Mumbai. “But car sales more than made up for it.”

$1 = 53.8050 Indian rupees Reporting by Henry Foy; Editing by Daniel Magnowski

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