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Maruti Suzuki’s third quarter net profit jumps 133% to ₹2,351 crore on lower input costs

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  • Maruti Suzuki has more than doubled its standalone net profit to ₹2,351 crore in Q3 from ₹1,011 crore in the same period last year, while Q3 sales rose 25.5% to ₹27,849 crore.
  • The profit hit was the result of lower raw material costs during the quarter.
  • Customers continued to shun small cars like the Alto, while the commercial vehicle segment – which includes cars like the Brezza and S-Cross – grew 23% year-on-year in the third quarter.

India’s leading automaker Maruti Suzuki India reported on Tuesday that third-quarter standalone net profit rose 133% from last year to ₹2,351 crore, while revenue rose 25.5% to ₹27,849 crore, beating analyst estimates. The better-than-expected revenue and profit growth was driven by higher sales and lower input costs.

For Q3 FY23, Maruti Suzuki reported a 22.7% sequential decline in its raw material costs.

Lower raw material prices, improved realizations and efforts to reduce costs helped Maruti Suzuki’s margins during the quarter, the company said.

The automaker’s operating margins continued to improve, rising 304 basis points year-on-year to 9.75% in the December quarter, the highest in the last eight quarters.

Total Maruti Suzuki sales were 4.65 lakh units, up 8.2% from Q3 FY22 but down 10% on a sequential basis.

On a sequential basis, the automaker’s sales fell 2.4%, while net profit increased 14% in Q3FY23. The sequential decline in sales and higher discounts during the December quarter resulted in a weak performance, but lower raw material prices helped support the company’s earnings during the quarter.

Demand softens in Q3, shortage of electronic components worsens

Maruti Suzuki also reported a decline in demand during the third quarter, with the order book falling from 4.12 lakh in the second quarter to 3.63 lakh units. New vehicle orders also fell to 1.19 lakh units in Q3 from 1.3 lakh units in Q2.

It also reported that shortages of electronic components worsened during the quarter, impacting production of 46,000 vehicles, up from 35,000 vehicles in the third quarter.

The Maruti Suzuki Q3 in numbers:

Particularities Q3 FY23 2nd quarter FY23 Q3 FY22
Gain ₹27,849 crore ₹28,544 crore ₹22,188 crore
Net profit ₹ 2,351 crore ₹ 2,062 Crore ₹ 1,011 crore
Net margin 8.4% 7.4% 4.6%
Total sales (units) 4,65,911 5,17,395 4.30.668

Source: company reports

Entry-level car sales are falling as customers move to more premium cars

Customers continued to shun Maruti Suzuki’s mini cars such as the Alto – the mini segment reported declines on both a year-over-year and sequential basis, alongside the van and light commercial vehicle segments.

On the other hand, the company reported strong growth in the medium and commercial vehicle segments, which grew both on a year-over-year basis and on a sequential basis.

The commercial vehicle segment, which includes cars such as the Brezza, S-Cross, XL6 and Grand Vitara, now accounts for nearly 24% of Maruti Suzuki’s domestic sales in Q3 FY23, compared to 21.5% in Q3 FY22.

Maruti Suzuki’s domestic sales in all segments:

Segment Q3 FY23 Q3 FY22 yoy 2nd quarter FY23 QoQ
mini 52,952 55,624 -5% 72,069 -27%
Compact 2,04,031 1,75,054 17% 2,28,551 -11%
Medium size 4,592 3,362 37% 4,254 8%
Utility Vehicles 96,542 78,637 23% 82,778 17%
Vans 26,625 29,056 -8% 37,744 -29%
Light commercial vehicles 7,098 10.103 -30% 8,692 -18%
Sell ​​to other OEMs 12,089 13,837 -13% 20.112 -40%
Total domestic sales 4.03.929 3,65,673 10% 4,54,200 -11%

Source: company reports

$MARUTI.NSE Strong earnings expected from Maruti Suzuki in Q3. It can also continue to post good results in the fourth quarter thanks to the strengthening of its SUV line. Technical analysis indicates that Maruti gained support from 8000-8150 levels and gave a strong weekly close of 8394. Since then, the stock has been in an uptrend, indicating bullishness. Previously, Maruti had taken multiple supports of 200 EMA on weekly time frame and is currently trading above it. The overall structure looks good for short-medium term targets of 8830-9000.

— (@AnweshaPanda) January 24, 2023


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