Auto major Mahindra and Mahindra’s (M&M) September quarter results weren’t too bad keeping in mind the current slump in demand,

Volumes declined in both the automotive and farm equipment (tractor) segments, but the latter did little better than expectations. The 8% y-o-y decline in tractor volumes is better-than-estimates, analysts said. Sales in the automotive segment fell 21% year-on-year.

Poor volumes took a toll on M&M’s top-line and bottom-line in the September quarter. Net profit after tax was down 24% y-o-y to ₹1,355 crore and revenues dropped nearly 15% y-o-y to ₹10,935 crore.

Although M&M’s operating margin fell 40 basis points y-o-y to 14% the contraction was contained by tractor business, said Bharat Gianani, analyst at Sharekhan by BNP Paribas. One basis point is one hundredth of a percentage point. Margin of M&M’s automotive segment slipped to a multi-quarter low in September while tractor margin is maintained. Gianani further added that automotive segment margins dropped sharply due to negative operating leverage and higher discounts.

In a post earnings press conference, M&M’s management said it witnessed market share gains in all sub-segments during the quarter. But in a de-growing industry, increased market share wouldn’t translate into higher volumes. In terms of volume contraction, the second quarter was worse than the first quarter for the automotive industry.

The results didn’t quite impress the Street. M&M shares were flat in Friday’s trading session at ₹580 on the NSE.

In this calendar year so far, the M&M stock has lost nearly 28%. And its fall much sharper than that of the Nifty Auto index that fell nearly 12% in the same span. Clearly, shares of the company have lot of ground to cover.

The sector as a whole has been a laggard mainly impacted by the board-based consumption slowdown. While one is hopeful that government measures would reverse this slowdown, analysts caution that transition to BS-VI is the next speed bump for the sector.