The company had a disappointing, or should we say, “ below estimates” performance for Q1FY18. Its net profit for the quarter fell 20% (YoY) , the steepest fall since 2015, at Rs.766 crore. This was on a 3% increase in revenue at Rs.12,336 crore – higher base effect is also at play because in Q1FY17, the income included an exceptional gain of Rs.91 crore. EBITDA fell 2% to Rs.1267 crore and margins fell 80 bps to 10.9%.

Thanks to the implementation of the GST, the company’s bottomline was impacted. It had to pay Rs.144 crore as compensation to dealers for a change in levies after under the GST. And with people expecting a price reduction after GST comes in from 1st July, people simply postponed their passenger vehicle buying, which affected the revenue. Also, on the commercial vehicles front, sales dipped due to pre-buying of Bharat Stage-III emission norms compliant vehicles in the previous quarter, and production constraints of BS-IV models.

A breakdown of the vehicle sales shows that automotive sales fell 2% at Rs.7682 crore but what saved the day was the farm segment – farm equipment revenue was up 13% at Rs.4321 crore. The company actually outperformed the industry with this 13% growth in tractors, catapulting its market share to dominance at 45.8%.