M&M margin rebounds sequentially but stays below last year's 18.44%
Standalone revenue grew +26.23% YoY, but expenses rose faster at +31.29%; other income contributed 15.99% of pre-tax profit.
Filed 05 Nov 2026, 12:57 IST · Mahindra & Mahindra Ltd (M&M)
Key takeaways
- Standalone revenue grew +26.23% YoY, but expenses rose faster at +31.29%, limiting operating-profit growth to +3.87%.
- Operating margin recovered 2.90 percentage points QoQ as revenue grew +5.54% while expenses rose only +2.05%, but remained 3.27 percentage points below last year.
- Other income contributed 15.99% of pre-tax profit, while a 2.38-percentage-point YoY fall in the tax rate helped net profit grow +12.85%.
Price around the results
Revenue growth did not translate into operating-profit growth
M&M's standalone revenue growth of +26.23% YoY was outpaced by expense growth of +31.29%, leaving operating-profit growth at only +3.87%. Sequentially, momentum improved: revenue rose +5.54% while expenses increased +2.05%, lifting operating profit +30.45%. Lower interest expense, down 33.10% QoQ, also supported the sequential rise in pre-tax profit.
Sequential margin recovery came with a YoY cost squeeze
Operating margin rose 2.90 percentage points QoQ to 15.17% because revenue grew faster than expenses, but it fell 3.27 percentage points YoY as costs grew faster than revenue. Other income accounted for 15.99% of pre-tax profit, making it a material support to reported earnings. The YoY tax-rate reduction of 2.38 percentage points also helped net profit grow faster than pre-tax profit.
Margin recovered after three quarters of sequential decline
The operating margin had fallen from 18.44% in Q2FY26 to 14.68% in Q3FY26, 13.91% in Q4FY26 and 12.27% in Q1FY27 before recovering to 15.17%. M&M's margin was 3.42 percentage points above the 11.75% median among 231 Consumer Discretionary peers that had reported the quarter. The recovery therefore improved the recent direction, but did not restore last year's margin level.
Management flagged pricing, capacity and tractor pressure
Management said auto price increases of 5% were planned from January to July 2026 and farm price increases of 4% from April to August 2026. It said additional NU_IQ capacity of 10,000 units per month was being created in Chakan, taking operational capacity to 92,000 by the end of F28. Management also said core tractors could face pressure in Q3, improve in Q4 and return to normal in F28, while the presentation identified commodity inflation, supply-chain constraints and a monsoon deficit as challenges.
No current stock reaction to compare with a mixed history
The results have not yet produced a reported post-result stock move. Across the eight recent result reactions, the stock rose four times and fell four times, with a median absolute move of 1.91%, indicating no consistent historical direction.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹44,282 cr | ₹41,959 cr | +5.54% | +26.23% |
| Other income | ₹1,062 cr | ₹776 cr | +36.73% | +51.29% |
| Expenses | ₹37,564 cr | ₹36,809 cr | +2.05% | +31.29% |
| Operating profit | ₹6,718 cr | ₹5,150 cr | +30.45% | +3.87% |
| Operating margin (%) | 15.17% | 12.27% | — | — |
| Interest | ₹67 cr | ₹100 cr | -33.10% | +13.10% |
| Depreciation | ₹1,074 cr | ₹1,050 cr | +2.29% | +3.25% |
| Profit before tax | ₹6,638 cr | ₹4,776 cr | +38.99% | +9.37% |
| Tax | ₹1,536 cr | ₹1,091 cr | +40.82% | -0.82% |
| Net profit | ₹5,102 cr | ₹3,685 cr | +38.44% | +12.85% |
| EPS (₹) | ₹42.42 | ₹30.65 | +38.40% | +12.70% |
Operating margin of 15.17% compares with a Consumer Discretionary sector median of 11.75% across 231 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- Auto price increases of 5% were planned from January to July 2026.
- Farm price increases of 4% were planned from April to August 2026.
- Core Tractor was expected to face pressure in Q3, improve in Q4 and return to normal in F28.
- M&M expected mid- to high-teen growth in FY27.
- The LCV industry below 3.5 tonnes was expected to deliver double-digit growth in FY27.
Expansion
- Additional NU_IQ capacity of 10,000 units per month was being created in Chakan, taking operational capacity to 92,000 by F28 exit.
- A greenfield plant was announced in Nagpur for F29 and beyond to support new launches.
- The Nagpur plant was planned to add approximately 20,000 units per month by the H1F30 exit.
- The Nagpur plant was planned to add a further approximately 20,000 units per month by the H1F31 exit.
- Truck and bus capacity expansion was being planned after HCV capacity was fully utilised for higher Blazo demand.
New initiatives
- The company planned to accelerate AI adoption and pursue partnerships.
- Farm was building a technology ecosystem with more than 50,000 telematics kits deployed.
- Farm was expanding DigiSense, Autosteer and Krish-e.
- Last Mile Mobility had a launch pipeline of eight products.
- The company was diversifying its supplier base to address supply chain constraints.
Problems & risks
- Commodity inflation was identified as a challenge for the business.
- Supply chain constraints were identified as a business challenge.
- A monsoon deficit was identified as a challenge affecting performance.
- International demand was identified as a challenge.
- Labour shortage was identified as a challenge for the business.
What to watch
- Whether standalone operating margin holds above 15.17% after its 2.90-percentage-point QoQ recovery.
- Whether other income remains a material earnings support after contributing 15.99% of pre-tax profit.
- Whether revenue growth remains above +26.23% YoY as the reported 5% auto and 4% farm price increases are reflected.