Mumbai: Mahindra & Mahindra, India's largest utility vehicles maker, reported a 79 per cent jump in quarterly profit as robust volumes in a fast-growing auto market mitigated higher raw material costs.
Mahindra said net profit, including a one-time gain, for the fiscal third-quarter ended December 31 stood at Rs 7.35 billion ($162 million) from 4.1 billion a year earlier.
Excluding the one-time gain of Rs 1.17 billion on exercise of a put option the company held on a long-term investment, profit rose 49 per cent to 6.17 billion.
Net sales rose 36 per cent to Rs 60.74 billion.
Shares in the company extended gains to 5.6 per cent after the results, and the company said it was positive on the outlook although rising input prices and higher interest rates were a cause for concern.
"Their margins have slightly improved, probably because of better operating leverage and cost control. The main concern remains raw material cost pressures and if they can sustain these margins," a sector analyst at Mumbai's Angel Broking said.
Mahindra sold 56,211 utility vehicles during the quarter, and held a market share of 62 per cent in the segment.
Operating margin for the quarter was around 15 per cent, slightly better from a year earlier, analysts said.
Mahindra expects to take full control of South Korea's Ssangyong Motor by April. It bought the SUV maker last year for 522.5 billion won ($468.4 million) to access advanced technologies and gain a foothold in the southeast Asian market.
Auto sales in India touched a record high in January, defying expectations of a slowdown, powered by a growing middle class, easier access to loans and a wider choice of models.
Vehicle sales in India, one of the fastest growing auto markets in the world, grew 31 percent in 2010, but that growth was expected to slump to 15 per cent this year amid rising interest rates, fuel prices and vehicle costs.
Leading carmaker Maruti Suzuki lagged market estimates to report an 18 per cent decline in quarterly profit, while largest motorcycle maker Hero Honda posted a 20 per cent fall in profit and said margins would remain under pressure in the short term.
Last month, Goldman Sachs downgraded Hero Honda and Mahindra & Mahindra to "sell," citing margin pressures and moderating demand growth outlook.
"While the demand remains robust, the recent hardening in the prices of commodities and oil causes a degree of concern," Mahindra said in a statement.
"The measures adopted by the Reserve Bank of India to combat inflation will necessarily result in tighter liquidity and further possibility of interest costs moving upwards," it added.