Financial Projections for Q2 FY25: Mahindra & Mahindra Ltd
1. Basis for Projections
The projections for Q2 FY25 are based on:
- Historical financial performance up to Q1 FY25.
- Management's guidance from the latest earnings call, indicating a mid to high teens growth for FY25.
- Recent announcements and market developments impacting Mahindra & Mahindra Ltd.
- Current industry trends and economic outlook.
2. Assumptions for Q2 FY25 Projections
- Revenue Growth: A projected QoQ revenue growth of 5%, considering seasonal factors and management's optimistic outlook.
- EBITDA Margin: Maintained at the Q1 FY25 level of approximately 19.46% of revenue.
- Other Income: Slight decrease due to trends, estimated at INR 720 crores for Q2 FY25.
- Depreciation: Assumed to marginally increase to INR 1,260 crores, reflecting ongoing capital expenditure.
- Interest Expense: Projected to rise by 5% QoQ to INR 2,213.07 crores due to increased borrowings.
- Tax Rate: Estimated at an average effective tax rate of 23.5% based on recent quarters.
3. Summary of Projected Financials for Q2 FY25
| Metric |
Actual Q1 FY25
(Jun-24) |
Projected Q2 FY25
(Sep-24) |
QoQ Change |
| Revenue |
INR 37,217.72 crores |
INR 39,078.61 crores |
+5.0% |
| Gross Profit / EBITDA |
INR 7,243.12 crores |
INR 7,601.64 crores |
+5.0% |
| PBT |
INR 4,620.87 crores |
INR 4,848.57 crores |
+4.9% |
| PAT |
INR 3,282.63 crores |
INR 3,708.16 crores |
+12.9% |
4. Assumptions Used in Forecasting and Underlying Risks Involved
4.1 Key Assumptions
- Steady Market Demand: Assumes continued demand in the automotive and farm equipment sectors.
- Cost Management: Operational efficiencies and cost-saving initiatives will maintain EBITDA margins.
- Stable Commodity Prices: Raw material costs remain stable without significant inflationary pressures.
- No Major Supply Chain Disruptions: Assumes a smooth supply chain, particularly for semiconductor components.
4.2 Underlying Risks
- Market Volatility: Economic uncertainties or changes in consumer demand could impact sales.
- Regulatory Changes: New regulations or compliance requirements may increase operating costs.
- Commodity Price Fluctuations: Increases in raw material prices could compress margins.
- Supply Chain Constraints: Global shortages, especially in semiconductors, could affect production schedules.
- Interest Rate Risks: Rising interest rates may increase financing costs and impact net profitability.
5. Conclusion
Based on the above assumptions and considering management's positive outlook, Mahindra & Mahindra Ltd is projected to show moderate growth in Q2 FY25. The company is expected to maintain its profitability margins while navigating potential risks in the operating environment.