M&M Q1 FY '13 earnings: Investment interest by domestic fund managers sees a decline

Mahindra & Mahindra results for the Jun '12 quarter were in line with the estimates of Economic Times Intelligence Group. The company's standalone top-line grew by 39% year-on-year while on a consolidated basis, the top-line registered a growth of about 32%. This stupendous performance boosted its share price by nearly 4% to Rs 722.75 at the end of the day's trade.

There was however some pressure on its operating margins given the high incidence of the material costs. While in absolute terms, the material cost increased by about 34% year on year, as a percentage to sales, the same has shot up over 71%, the highest for the June quarter since 2008. The net profits of the company however surged by 20% year on year given the imposition of tight controls on the expenses.

The growth in the profit is also on account of good volume performance by the company's automotive sector, especially the utility vehicles. Backed by the success of its latest launch XUV 500, the sales of its UV segment have upped by nearly 32% for the quarter notwithstanding the overall slump in the automotive industry.

There is however a decline in the investment interest in this company by the domestic fund managers. The mutual fund shareholding in the company has been on a steady decline since Mar '10 quarter and has now fallen to less than 2.5% - lowest since Mar '09.