Mahindra to boost capacity after quarterly profit jump

Indian automaker Mahindra & Mahindra plans to expand capacity for its sports utility and electric vehicles this year to meet rising demand, which helped it post a nearly 33% quarterly profit rise on ‌Wednesday.

The Mumbai-based firm ⁠is ⁠India's second-largest carmaker by sales, with a portfolio made up entirely of feature-rich SUVs.

Mahindra plans to increase production capacity of its combustion engine and electric SUVs by at least 3,000 units a month each, by August or September, Rajesh Jejurikar, Mahindra's CEO for the auto and farm sector, said in a press conference. While the EV capacity will be new, Mahindra will unlock capacity for combustion-engine models ⁠by addressing ‌production bottlenecks at existing plants. The company did not announce any new investments. The capacity increase will represent 11% of the automaker's average monthly SUV ⁠volumes, including EVs.


Jejurikar said demand is stronger than the pace at which supply can be ramped up. In September, India cut the goods and services tax rate on most cars to 18% from 28% in a bid to boost consumption. Tax on large SUVs like Mahindra's XUV 7X0 was cut to 40% from about 50%, while on tractors it was reduced to 5% from 12%. Mahindra is India's largest tractor manufacturer.

The firm's ‌SUV sales jumped 26% in the December quarter as a result of the tax cuts, beating industry-wide growth of 20.6%. That helped boost quarterly revenue by 26% ⁠to 385.17 billion rupees ($4.25 billion).

Quarterly profit rose to 39.31 billion rupees, missing analysts' estimate of 39.92 billion rupees, per data compiled by LSEG, due to a one-time charge of 981.9 million rupees tied to India's new labour codes.

Mahindra's larger auto segment, comprising SUVs and small commercial vehicles, accounts for about 73% of revenue. The smaller, but more profitable, farm business forms 25%. Shares of the company pared most gains logged before results to close marginally lower.