India’s largest carmaker Maruti Suzuki India (MSIL) posted a 129.7 per cent spike in consolidated net profit in the third quarter of FY23 to Rs 2,391 crore, primarily due to price hikes, better demand for its top-end models, favourable foreign exchange variation and softening commodity prices.
While the company’s consolidated revenue jumped by 26.9 per cent year on year to Rs 29,918 crore in Q3, its total expenses were up just 20.6 per cent in the same time period (see table).
According to MSIL’s filing with the BSE, cost reduction efforts, improved realisation, favourable foreign exchange variation, softening of commodity prices and higher non-operating income were the reasons behind the rise in net profit in Q3.
“Pending customer orders stood at about 363,000 vehicles at the end of this quarter (Q3), out of which about 119,000 orders were for newly-launched models,” MSIL noted.
Mitul Shah, Head of Research at Reliance Securities, said, “MSIL’s revenue rose in Q3 due to price hikes and improved product mix with higher demand for top end models.”
“Declining commodity prices is the single biggest trigger for margin expansion,” he said, adding that the company’s net profit exceeded his estimate by 22.4 per cent.
The share of material costs in MSIL’s total net sales reduced from 78.8 per cent in Q3FY22 to 75.7 per cent in the ongoing financial year.
Himanshu Singh, Research Analyst, Prabhudas Lilladher, said Maruti Suzuki Q3 performance was better than street estimates. The order book for Maruti’s new models Brezza and Vitara remains strong, he mentioned.
“With the addition of two new models (Jimny and Fronx) to its portfolio, we see the order book for new launches starting to pick up again, and taking the mix to higher ASP (average selling price) models.
With these models, MSIL has addressed white spaces in its portfolio,” he added.
MSIL’s domestic PV (passenger vehicle) share currently stands at 41 per cent versus 43.4 per cent in FY22 and a peak share of 52 per cent in April 2021.
“We see Maruti’s financials continue to improve aided by operating leverage and better (product) mix,” Singh noted.
At the recently concluded Auto Expo 2023 in New Delhi, the company unveiled three sport utility vehicles (SUV): concept electric vehicle eVX, off-roader Jimny and compact Fronx.
Maruti Suzuki underestimated the speed of the sport utility vehicle (SUV) segment’s growth in the country and was now aiming to be number one in this section of the Indian car market, managing director and chief executive officer Hisashi Takeuchi said on January 12.
On Tuesday, Shah said that MSIL has reported strong performance in Q3 and he expects the domestic PV industry to record double digit volume growth in FY23 and FY24, which would support the company’s business.
“Moreover, sales of premium products would further increase. MSIL would enjoy the benefit of higher market shares in CNG variants, as preference for CNG vehicles has been rising,” Shah added. MSIL’s perfomance
|Total unit sales||430,668||465,911||8.18%|
|Total income (Rs crore)||23,581||29,918||26.87%|
|Total expenses (Rs crore)||22,357||26,960||20.59%|
|Net profit (Rs crore)||1,041||2,391||129.68%|