Mahindra & Mahindra, India's largest maker of sports utility vehicles and tractors, posted a 27% surge in second-quarter profit after demand for farm equipment surged.
The maker of the Scorpio and Bolero SUVs had a standalone net income of 11.63 billion rupees ($173 million) for the quarter ended Sept. 30, up from 9.15 billion rupees a year earlier, the company said in a statement.
Sales jumped nearly 16% to 113.64 billion rupees, spurred by a surge in tractor sales in rural areas after a protracted slump. An increase in demand for its XUV 500 and KUV 300 SUVs also helped Mumbai-based Mahindra.
The company's automotive sales grew more than 12% to 114,795 units, while tractor sales rose about 37% to 57,863 units in the three-month period.
Mahindra has been introducing new models and cutting costs to combat rising competition from Maruti Suzuki India, Hyundai Motor and other automakers who are introducing newer SUVs. Mahindra's recent launches include compact SUVs named KUV100 and Nuvosport.
"After two years of sub-par rainfall, this year's monsoon has been abundant and well spread which will help revive farm income and private consumption," Mahindra said in a statement. "Moreover, there are signs of demand recovery manifesting through boarder consumption, and pickup in growth rates in automobile sales, air passenger traffic and retail loans."
The company said prices of key agricultural inputs have stabilized, signaling a mend in farmer balance sheets and helping revive the overall rural economy.
Mahindra said it now expects industry sales of automobiles to expand 20% by the end of this year.
Sales of automobiles in India hit a four-year high in September after dealers stockpiled vehicles ahead of the crucial festival season that began in October. The revival of monsoon as well as the government move to increase salaries and pensions for millions of its employees and pensioners by at least 14% has also boosted demand.
Still, concerns about a likely slowdown linger amid India's efforts to introduce a slew of measures to curb pollution.