Mahindra Revises FY27 Tractor Industry Growth Forecast to Flat

Mahindra & Mahindra, India’s largest tractor maker, has trimmed its FY27 tractor industry growth forecast to broadly flat. As recently as July, it was expecting growth of around 5%. The change comes after a weak monsoon, falling reservoir levels, and rising input costs started hurting farmers’ pockets.

Why the Outlook Changed

The southwest monsoon ended at just 87% of the long-period average, and reservoir storage was 16% below normal as of October 15. Maharashtra and Karnataka were hit hardest, with rainfall deficits of 19% and 30%, respectively. Dry spells and poor soil moisture have also raised worries about crop yields.

Rajesh Jejurikar, Executive Director and CEO of Mahindra’s Auto and Farm Sectors, said, "The reservoir levels are much worse than what we would have thought them to be." On top of this, farm input costs have risen faster than crop prices, leaving farmers with less money to spend on new tractors.

Profit Margins Take a Hit

Mahindra’s core tractor business felt the pressure in the September quarter. Revenue stayed flat at ₹7,652 crore, but profit before interest and tax fell nearly 15% to ₹1,345 crore. The margin dropped to 17.6% from 20.6% a year ago, a fall of 300 basis points. Higher steel, base metal and rubber prices are to blame.

Mahindra raised prices by around 4% between April and August 2026, but that wasn’t enough to cover the rising costs. Across the wider farm equipment business, revenue fell 6% to ₹9,572 crore and profit after tax declined 9% to ₹1,053 crore. Tractor volumes dropped 6% to about 1.16 lakh units, and domestic market share slipped to 41.5%.

First Half Still Positive

In the June quarter, Mahindra sold 2,74,068 tractors in April to September, up 7% year-on-year. Domestic sales rose 6%, and exports grew 16%. October saw domestic dispatches fall 13% to 62,626 units, but the company says this was mostly due to Diwali shifting to November this year. For April to October, domestic sales are still 2% higher at 3,25,498 units.

What Mahindra Plans Next

The company expects margins to stay under pressure in the December quarter, improve in Q4 and return to normal in FY28. To get there, it is relying on price adjustments, new product refreshes, higher exports and restructuring of its overseas farm businesses. It has already exited Sampo in Finland and Erkunt Foundry in Turkey, while restructuring in Japan is ongoing.

Tractor Gyan’s Take

After a blockbuster FY26, a slowdown was always likely, but the monsoon has made it sharper. Tractor demand in India is closely tied to rain, reservoirs and farm income, and right now all three are under strain. For buyers, a softer market could mean better dealer offers and festive deals, especially in rain-hit states like Maharashtra and Karnataka.

For dealers and manufacturers, the next two quarters will be about managing inventory and costs carefully. The silver lining is that Mahindra’s strong first half, rising exports and expected margin recovery show the business is still on solid ground. If the rabi season and commodity prices act in favour, FY28 could bring a healthy rebound.