M&M shares rose 3% on Friday morning as equity investors cheered a double-digit earnings expansion and accelerating utility vehicle volumes. Standalone net profit for the September quarter climbed 13% year-on-year to ₹5,102 crore, up from ₹4,521 crore in the corresponding period last year. Revenue advanced 27% to ₹42,477 crore.
But the operational picture revealed an internal tug-of-war. Standalone earnings before interest, tax, depreciation, and amortisation (EBITDA) crept up just 2% to ₹4,948 crore, suppressed by input costs that compressed the standalone EBITDA margin by 290 basis points to 11.7%. Consolidated numbers delivered wider breathing room. Group revenue jumped 25% to ₹57,515 crore, while consolidated EBITDA rose 17% to ₹10,239 crore, delivering a 17.8% margin.
| Financial Metric (Q2) | Standalone (₹ Cr) | Standalone YoY | Consolidated (₹ Cr) | Consolidated YoY |
|---|---|---|---|---|
| Revenue | 42,477 | +27% | 57,515 | +25% |
| EBITDA | 4,948 | +2% | 10,239 | +17% |
| EBITDA Margin | 11.7% | -290 bps | 17.8% | -120 bps |
| Net Profit | 5,102 | +13% | — | — |
Segment performance split along stark lines. Auto EBIT margins expanded 58 basis points sequentially to 7.7%, propelled by order backlogs in utility vehicles, light commercial vehicle traction, and early scale in battery electric vehicles. Farm equipment went the opposite way. Farm EBIT margins contracted 176 basis points quarter-on-quarter to 16.8%.
Management also cut its FY27 tractor industry growth guidance to flat year-on-year, down from an earlier 5% expansion target. Deficient rainfall and depleted reservoir levels across key agrarian belts in Maharashtra and Karnataka choked rural retail demand.
Brokerages brushed off the tractor downgrade. CLSA reiterated a 'High Conviction Outperform' call with a 12-month price target of ₹4,650, tagging M&M as its premier pick in the auto pack. The brokerage argued that market fears over tractor volumes are overdone. Farm machinery accounts for roughly 30% of M&M's projected FY28 consolidated EBIT, meaning a 5% swing in tractor volumes alters the firm's sum-of-the-parts equity valuation by less than 2%.
Lingering discount multiples strengthen the institutional bid. M&M trades around 15 times its FY28 consensus earnings per share—well below its 10-year historical average price-to-earnings multiple of 17 times. Citi maintained a 'Buy' rating with a target of ₹4,330, modestly hiking full-year earnings projections while adjusting for rural drag. Bernstein pinned an 'Outperform' stance with a ₹4,100 target, noting consolidated EBIT excluding other income surged 19%, demonstrating that non-automotive subsidiaries now provide a dependable earnings buffer.
Caution remains warranted for the third quarter. Management alerted investors that commodity basket pressures will stay elevated through December, leaving margin preservation squarely dependent on upcoming passenger vehicle launches and production line throughput.