Mahindra rides the SUV boom, but margins feel the cost squeeze

Mahindra & Mahindra's SUV-led growth helped drive a rise in profit in the September quarter, but higher commodity costs and weakness in its farm business weighed on operating performance, even as vehicle sales continued to grow.The automaker reported a 25% year-on-year rise in consolidated profit after tax to Rs 4,588 crore in the second quarter of FY27, with its auto business emerging as the biggest growth driver.

Mahindra share price was up 5.6% to Rs 3,128.9, as of 1:37 pm.

Strong demand for SUVs helped offset weakness in the farm business, while its finance and technology businesses provided additional support.


Mahindra's vehicle volumes grew 26% during the quarter, with SUVs accounting for much of the momentum. The company reported a 24.3% revenue market share in the SUV segment, underlining its position in a market where demand for utility vehicles continues to be a key growth driver for passenger vehicle manufacturers.

However, the auto business's standalone PBIT margin fell 120 basis points year-on-year to 7.7% in the September quarter. Excluding the impact of the eSUV contract manufacturing agreement (CMA), the margin stood at 9.1%.

Mahindra attributed the pressure partly to a significant increase in commodity prices.

The farm segment remained a weak spot, with lower tractor volumes and a decline in revenue and profit. The company attributed the performance partly to a shift in the festive season. Its operating margin also contracted amid higher commodity costs.

"Auto continued to grow on the back of strong consumer demand, while Farm experienced a marginal decline on account of the festive season shift," CEO & Managing Director Anish Shah said in a statement.

Finance and technology businesses offer support

Mahindra's diversified portfolio helped cushion the impact of the weaker farm performance. Mahindra Finance recorded growth in assets under management and profit, while Tech Mahindra continued to expand its operating margin.

The group's services businesses also reported higher revenue and profit.

Shah said the results reflected the resilience of the group's businesses and disciplined execution despite an uneven macroeconomic environment and geopolitical and commodity-related headwinds.