New Delhi : Maruti Suzuki India Ltd beat analysts’ expectations with a 58% rise in quarterly profit, though the country’s largest carmaker cautioned that demand for its bread-and-butter small cars is declining as they become costlier. have gone.
Suzuki Motor Corp. The entity posted a net profit of 1,838.9 crore in the three months ended March 31, despite challenges posed by rising input costs and semiconductor chip shortages affecting production and sales volumes. figure exceeded 14,800 crores is estimated in the survey of Bloomberg analysts.
Vehicle sales fell 0.7% to 488,830 units in the quarter. Sales in the domestic market fell 8% to 420,376 units from a year ago, while exports grew nearly 93% to a record 68,454 vehicles.
Maruti posted operating profit of 1,779.6 crore in the March quarter, a rise of 42% over a year ago and a 95% increase from the last three months, as the automaker posted net sales growth of 11% over a year ago and 15% sequentially. 25,514 crores.
Improvements in operating performance came from cost reduction efforts, lower sales promotion expenses, increased selling prices and higher non-operating income.
Overall, the company’s financial performance exceeded market expectations.
Mitul Shah, Head of Research, Reliance Securities Ltd. said, “Maruti Suzuki delivered a strong performance in 4QFY22, with Ebit margin of 9.1%, 100bps higher than our estimate of 8.1%.”
However, availability of chips and rising cost of commodities will pose challenges for Maruti.
The semiconductor shortage means Maruti’s pending orders of around 268,000 vehicles as of the end of March have now crossed 300,000 vehicles, chairman RC Bhargava said in a conference call with reporters.
To be sure, the challenge for Maruti is also the shrinking market for entry-level cars.
During FY22, the company’s small and compact car sales fell 3% to 916,643 units. However, sales of mid-sized sedans and utility vehicles rose 15% and 27% to 15,869 units and 290,701 units, respectively.
Bhargava said the proportion of increase in prices of entry-level small cars has been much higher than that of high-end cars, which is a major reason behind the shrinking market for small cars. Nevertheless, the small car segment remains the biggest volume driver for the company.
Meanwhile, Maruti expects to introduce a wide range of new vehicle models this fiscal as it seeks to maintain its market leadership. However, investors will keep an eye on the pace of sport-utility vehicle launches and progress in the electric vehicle space. While the company plans to launch EVs in 2025, Bhargava stressed that Maruti is also focusing on hybrid vehicles. The company’s management also expects continued strong traction in export markets, supporting its overall volumes. In addition, the low-penetration rural market also offers opportunities, and improving levels of prosperity in rural India should help sales volumes.
Overall, analysts expect sales of premium products at Maruti to increase further. The company will also take advantage of the higher market share in the CNG variants, as the preference for CNG vehicles is increasing.