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Informist, Saturday, Jul 20, 2024

 

By Darshan Nakhwa

 

MUMBAI – Maruti Suzuki India Ltd is expected to report a robust growth in net profit for the June quarter on the back of higher sales, richer product mix, price hikes, softening commodity prices, and a favourable currency exchange rate, according to brokerages.

 

India's largest passenger vehicle manufacturer's net profit is likely to surge 31% on-year to 32.51 bln rupees in Apr-Jun, according to an average of estimates from 12 brokerages. The company's cash profit from operations, or earnings before interest, tax, depreciation and amortisation, is estimated at 39.51 bln rupees, representing a growth of slightly over 32% on year, as per the average of estimates from 10 brokerages.

 

The net profit estimates range from 34.60 bln rupees by Prabhudas Lilladher to 29.39 bln rupees by Emkay Global Financial Services, while EBITDA estimates range from 42.23 bln rupees by Prabhudas Lilladher to 36.25 bln rupees by Nuvama Wealth Management.

 

Maruti Suzuki's EBITDA margin is projected to expand to 11.5% in Apr-Jun from 9.2% in the year-ago period, according to the average of estimates of 10 brokerages. The 230 basis points expansion in EBITDA margin is expected to be driven by price hikes, softening of raw material prices, and an increased share of high-margin utility vehicles in total sales. A favourable foreign exchange rate and better operating leverage are also expected to aid the metric in Apr-Jun.

 

During the quarter, Maruti Suzuki's raw material cost as a percentage of net sales is expected to have declined to 71% from 72.8% in Apr-Jun 2023, according to Motilal Oswal Financial Services. In Apr-Jun, prices of domestic cold rolled coil steel, aluminium, lead, copper, and rubber declined 2-31% on year, according to data from Kotak Institutional Equities.

 

A mid-single digit growth in overall vehicle sales and high average selling price, led by price hikes, are expected to push up the company's net sales by 7.5% on year to 347.45 bln rupees in Apr-Jun from 323.27 bln rupees a year ago. Among the estimates, the highest projection for the company's topline is 364.02 bln rupees and the lowest is 339.44 bln rupees.

 

Motilal Oswal Financial Services has projected the company's average selling price at 671,039 rupees per unit, up from 649,095 rupees a unit in the year-ago period and 654,672 rupees in Jan-Mar.

 

Maruti Suzuki's total sales rose 5% year-on-year to 521,868 units in Apr-Jun. The automaker's overall despatches were driven by a robust growth in sales of utility vehicles and a healthy uptick in exports. The company sold 163,130 utility vehicles in India during the quarter, up just over 29% from 126,401 units a year ago. The segment's share in the company's total volumes in Apr-Jun rose to slightly over 31% from 25% a year ago.

 

The strong growth in sport and compact utility vehicles after the launches of the Grand Vitara, Fronx, and new Brezza, helped the company offset the weakness in the small cars segment amid the shift in consumer preference. During the quarter, the despatches of passenger cars, comprising mini, compact and mid-size cars, fell nearly 13% on year to 222,193 units.

 

The company's total domestic sales, including passenger and commercial vehicles and sales to other original equipment makers, rose nearly 4% on year to 451,308 units. Its exports rose 11.6% on year to 70,560 units.

 

Sequentially, Maruti Suzuki's net profit is projected to decline by 16.2%, net sales by 9%, and EBITDA by 16%. Similarly, the EBITDA margin is seen contracting by around 80 basis points from 12.3% in Jan-Mar. The automaker is expected to post decline across key earnings metrics on account of 10.6% drop in overall sales.

 

Maruti Suzuki is scheduled to report its earnings on Jul 31. The company's shares have declined by 1.4% since its March quarter earnings. On Friday, the shares closed at 12,524.30 rupees on the National Stock Exchange, nearly 1% lower from the previous close.

 

Following are the Apr-Jun earnings estimates of Maruti Suzuki, in mln rupees, from 12 brokerages:

 

BROKERAGE	Net sales (in mln rupees)	Net Profit (in mln rupees)	EBITDA (in mln rupees)
Axis Securities Ltd	341,810	32,320	39,320
Elara Securities (India) Pvt Ltd	345,069	31,808	38,803
Emkay Global Financial Services Ltd	346,777	29,391	37,770
HDFC Securities Ltd	349,646	33,518	----
ICICI Securities Ltd	352,261	33,356	41,156
Kotak Institutional Equities	339,436	32,280	38,651
Motilal Oswal Financial Services Ltd	350,194	34,271	42,180
Nomura Equity Research	344,663	33,829	40,489
Nuvama Wealth Management Ltd	342,062	30,714	36,248
Prabhudas Lilladher Pvt Ltd	364,018	34,600	42,226
Sharekhan Ltd	345,690	32,760	----
YES Securities (India) Ltd	347,802	31,287	38,258
Average	347,452	32,511	39,510

 

End

 

Edited by Ashish Shirke

 

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