High input costs weighed on Mahindra & Mahindra's fourth quarter earnings. The company reported net sales of . 6,682.2 crore in January-March, up 27% from a year ago on the back of 22% increase in number of vehicles sold. Net profit was up 6% at . 606.5 crore. Operating profit was up a mere 2% to . 861.9 crore. Raw material costs were 33% higher in the fourth quarter. Salary expenditure more than doubled in the quarter as the company raised provision for interest payments on employees' provident fund.
Reacting to the lower-thanexpected earnings, the stock ended more than 5% down at . 664.60 on Bombay Stock Exchange on Monday. At the current market price, the stock is available at 12-month price earnings ratio of 14.7. Rising global commodity prices, including crude oil and higher interest rates will continue to put pressure on the tractor major's operating profit margins in the near term. Growth in the coming months is likely to be muted amid the Reserve Bank of India's aggressive monetary stance and high steel prices. Volume growth is seen pressured by lower car sales due to monsoon. Investors should not expect any significant rise in earnings per share from current . 10.
The company plans to launch eight new vehicles this year. It has a capital expenditure target of . 5,800 crore in the next three years. It is betting on growth in South Asia, South Africa and South American markets.
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