M&M hits 4-year low on dismal July sales; stock down 2%

Shares of Mahindra and Mahindra fell 1.8 percent intraday slumping to a 4-year low on August 1 after the company reported a double-digit decline in July sales, missing analyst expectations.

The stock lost 18 percent in the last one month to hit a day’s low of Rs 540.40, the lowest level since May 2014. It was quoting at Rs 543.95, down Rs 6.30, or 1.14 percent on the BSE at 1242 hours.

The company sold 40,142 units in July 2019, down by 15 percent compared to 47,199 units sold in the same period last year due to a continued slowdown in domestic business. Numbers were below Nomura expectations of 43,400 units.

“The headwinds faced by the automotive industry continue as a result of subdued consumer sentiment, triggered by various factors. The industry needs stimuli to help revive consumer demand and conversions,” Veejay Ram Nakra, Chief of Sales and Marketing, Automotive Division said.

“We hope that the overall buying sentiment will improve in the run-up to the festive season and with the monsoon turning out to be better than initially anticipated,” he added.

Domestic auto sales declined 16 percent YoY to 37,474 units, but export sales grew 3 percent to 2,668 units compared to the year-ago period.

M&M in its BSE filing said passenger vehicle sales dropped 15 percent to 16,831 units and commercial vehicle sales fell 17 percent to 15,969 units compared to year-ago.

On the tractor business front, the company almost met analyst expectations, saying it sold 19,992 units in July 2019, lower by 12 percent against 22,679 units sold in previous year.

Nomura had expected the company to sell 20,000 tractors in July 2019.

Domestic tractor sales declined 11 percent to 19,174 units and exports fell 26 percent to 818 units compared to the year-ago period.

Rajesh Jejurikar, President – Farm Equipment Sector said the company is hopeful that the spread of monsoon, government initiatives to increase rural incomes through farm & non-farm sources and an overall improvement in liquidity will spur improvement in tractor demand during the second half of the year.

news Source: moneycontorl

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