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Maruti Suzuki India beats estimates; net profit up 58 per cent

Price hikes, which offset high input costs, and lower promotional expenses helped Maruti Suzuki India post a 57.7% year-on-year growth in its consolidated net profit at Rs 1,838.90 crore during the January-March quarter, beating analysts estimates. The Bloomberg consensus estimate had pegged the company’s net profit at Rs 1,428.13 crore.

Total revenue during the period was Rs 26,740 crore, up 11.3% and higher than the Bloomberg estimate of Rs 26,607.91 crore.

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“The prices of commodities such as steel, aluminium, and precious metals witnessed an unprecedented increase during this year, which forced the company to increase prices of vehicles to partially offset this impact,” Maruti Suzuki India said.

Lower advertising and market expenses and better efficiencies enabled it to control costs to some extent.

The ongoing semiconductor crisis impacted output during the quarter, resulting in lower production by 270,000 vehicles. The shortage impacted domestic models the most. The company had 268,000 pending bookings at the end of the financial year.

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Sales volume for the quarter declined 0.7% year-on-year (y-o-y) as the company sold 488,830 units. Domestic sales volume declined 8% to 420,376 units, while exports, at 68, 454 units, were the highest in any quarter for Maruti Suzuki.

Earnings before interest tax, depreciation and amortisation (Ebitda) saw an increase of 21.9% y-o-y to Rs 2,427 crore, while operating margin at 9.08% was up 79 basis points.

The average selling price of vehicles rose 11.9% to Rs 5,21,940.

“The year started with Covid hurting us in the first quarter. But as the year progressed, we learnt to live with it, and it is unlikely to be any significant part of our game plan in the future. The chips have been a major factor affecting the production of not only Maruti, but all the car companies in the world. The prices of commodities like steel, aluminium and copper, have gone up sharply, partly because of the Ukraine war, and it has affected the cost of every product that I can think of,” RC Bhargava, chairman, Maruti Suzuki India, said.

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“Our earnings from the exports now are about $880 million. Whereas what we import now has come down to $350 million. Partly, this reduction in imports is because all our royalties are now paid in rupees and not in foreign currency,” he said.

Bhargava said that over the last three years, the market for customers at the lower end, who either use two-wheelers or smaller hatchbacks, has been shrinking significantly.

“The prices at the lower end of the market have increased proportionately by such a figure that a lot of customers have dropped out of the market. They can’t afford personal transport now or they can’t afford a four-wheeler transport. They have to go for two-wheelers,” he said.

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The company announced a dividend of Rs 60 per share (face value of Rs 5 per share), and will see total outgo of Rs 1,813 crore for the dividend payment.

Maruti Suzuki shares closed down 1.97% on the Bombay Stock Exchange at Rs 7,732.75 on Friday.

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