Mahindra plans to double EV capacity as quarterly profit rises

Indian automaker Mahindra & Mahindra said on Thursday it would double its auto production capacity over the next five years, after reporting a 6.8% rise in first-quarter profit driven by robust demand.

India’s passenger vehicle makers are accelerating investments in electric vehicles as consumer adoption grows and emissions norms tighten, with Mahindra betting on a broader model lineup to challenge rivals such as Tata Motors and Hyundai.

“We’re doubling EV production capacity, and that’s going to be a key driver of growth over the next few years,” Managing Director and CEO Anish Shah said in a post-earnings conference.

Demand in the quarter stayed strong, lifting quarterly revenue 23% to 419.2 billion rupees.

Government tax cuts last September continued to support demand for tractors, Mahindra’s most profitable offering, with farm segment revenue rising 19% to 109.47 billion rupees and volumes climbing 18% to 158,000 units.

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Revenue in the SUV segment rose 24.4% to 310.33 billion rupees.

However, the company’s standalone operating margin in the auto segment narrowed to 7.1% from 8.9% a year earlier, tempering standalone net profit growth to 6.8% at 36.85 billion rupees, due to a sharp spike in commodity costs and supply-chain disruptions following the Middle East conflict.

The automaker said it absorbed about 400 to 500 basis points of commodity inflation during the quarter and raised prices across vehicle segments.

Group Chief Financial Officer Amarjyoti Barua said the company managed higher commodity costs through supply-chain execution while maintaining its focus on profitability.

The company, which rolled out a second round of price hikes on July 8, said future price hikes will depend on commodity prices but it does not have immediate plans for more pricing actions.

Commodity inflation in the farm business remained elevated, although it was lower than in the auto business, Shah said.

Shares of Mahindra & Mahindra rose as much as 3.3% to their highest level in two months after the earnings announcement.