M&M Q4 numbers pass the test, but rising aluminium and steel costs cast a shadow on quarters ahead: Subhash Gate

Mahindra & Mahindra's fourth quarter FY26 results have come in broadly as expected — at least on the top line. Subhash Gate, Senior Associate for Equity Research covering auto and auto ancillaries at Choice Institutional, told ET Now that the numbers were largely in line with his firm's pre-earnings estimates, which had already factored in a strong Q4 performance from the automaker.

Volume growth came in at 22–25% year-on-year — squarely within Choice Institutional's forecast range — and revenue tracked that trajectory closely. But it is the margin picture, and more importantly the outlook for margins going forward, that Gate says deserves closer attention.

Volume growth, Q4 FY26
22–25% YoY (est.)


Q4 margin range
14–14.5%

RM lag impact
Q1 FY27 most at risk

Stabilisation expected
From Q2 FY27 onwards

The margin squeeze: Aluminium is the culprit

Margins have held at around 14–14.5% in Q4, but Gate is cautious about sustaining that level. He points to a sharp rise in aluminium and steel prices over the past one to two months — driven in part by the ongoing West Asia conflict and its effect on global commodity markets — as a key risk heading into Q1 and Q2 FY27.

"There is a three to six month lag in how commodity prices feed through to company costs — so the real impact will likely land in Q1, with stabilisation expected from Q2 onwards", says Gate.

The implication is that M&M's margin expansion story may need to wait. Companies in the auto sector typically absorb raw material cost changes with a delay — meaning the recent commodity spike has not fully shown up in Q4 numbers yet, but will in the coming quarters.

Three things to watch from management commentary

With a press conference and investor meet scheduled, Gate flagged three areas he will be tracking closely. First, the company's EV transition strategy and any details on new model launches. Second, management's commentary on the agri and farm equipment segment — El Niño conditions are forecast for the current season, which could dampen rural demand and weigh on tractor volumes. A high base from last year adds further pressure there. Third, how the company intends to manage raw material inflation — whether through price hikes, cost efficiencies, or simply absorbing the hit.

Gate remains broadly positive on M&M's medium-term trajectory, but the near-term setup is more nuanced than the headline beat implies.