Mahindra & Mahindra (M&M) posted a good set of numbers for Q4FY17, mainly on the back of very good tractor sales, which offset the tepid performance of the automotive segment. The rabi season crop and the festivals in March led to the good offtake of tractors, up 15% (YoY).

The company ended the quarter with a net profit at Rs.725 crore, up 20%, beating most estimates. This was on a muted 2% rise in total revenue at Rs.12,011 crore. EBITDA actually fell 13% to Rs.937 crore and margins declined 160 bps to – this was led by a 260 bps decline in EBIT margin and 24% decline in EBIT of automotive segment, partially offset by 31% increase in EBIT and 180 bps margin expansion of tractor segment.

The company had a one-time gain of Rs.93 crore from sale of long-term assets but this again was offset by the expense of Rs.171 crore it spent on its transition to Bharat Stage-IV compliant vehicles from the older BS-III emission norms.

The good part – the company is very optimistic about FY18 and expects GST and a good monsoon to bring in better earnings. The company has said that the ongoing remonetisation process and a cut in lending rates will aid discretionary spending and boost sales. In current fiscal, it plans to launch a new utility vehicle codenamed U321 and a small passenger car, as well as refreshes of the XUV500, KUV, and Scorpio.

The stock price is currently 4.5% up at Rs.1423 levels, while its 52-week high stands at Rs.1508.80.