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Thursday, April 09, 2020

Low commodity prices, reduced corporate tax help Maruti net rise 5%

Total revenue from operations rose 5.3 per cent y-o-y to Rs 20,707 crore on account of a 2 per cent y-o-y growth in volumes at 4,37,361 units during the October-December quarter and Rs 300 crore increase in other operating income to Rs 1,058 crore.

By: ENS Economic Bureau | New Delhi | Updated: January 29, 2020 4:36:33 am
Maruti Suzuki, Maruti Suzuki cars, Maruti Suzuki sals, Maruti Suzuki sar sales, Maruti Suzuki revenue, Maruti Suzuki loss, auto sector Shares of Maruti Suzuki fell 2.05 per cent to close at Rs 6,996.95 at the BSE. The result was announced during the market hours. (File)

Maruti Suzuki on Tuesday reported a 5 per cent year-on-year (y-o-y) increase in its net profit at Rs 1,565 crore for the quarter ended December 2019 as marginal recovery in volume growth, lower tax expenses and fall in commodity prices, were offset by higher sales promotion expenses, depreciation and lower other income.

Total revenue from operations rose 5.3 per cent y-o-y to Rs 20,707 crore on account of a 2 per cent y-o-y growth in volumes at 4,37,361 units during the October-December quarter and Rs 300 crore increase in other operating income to Rs 1,058 crore. Volumes rose after five consecutive quarters of decline. Shares of Maruti Suzuki fell 2.05 per cent to close at Rs 6,996.95 at the BSE. The result was announced during the market hours.

On the operating front, Ebitda (earnings before interest, tax, depreciation and amortisation) rose 8.9 per cent y-o-y to Rs 2,102 crore while margins rose by a marginal 30 basis points to 10.1 per cent as raw material costs declined significantly but was partially offset by discounts which had touched the highest-ever levels. Average discounts during the quarter was around Rs 33,000 as demand remained subdued and the company had to liquidate the year-end BS-IV stocks before new emission norms (BS-VI) come into force from April 2020. The cost of raw material as a percentage of net sales declined by a massive 14 per cent y-o-y in Q3FY20.

Explained

1st growth in four quarters

The company’s Ebitda margins have been falling for the past four quarters. Tax expenses fell 22.6 per cent y-o-y to Rs 441 crore.

Ajay Seth, CFO at Maruti Suzuki said margins were impacted due to high discounts on almost every model. “If the discounts would have been normal, the margins would have expanded by another around 150 basis points,” Seth told analysts at the post results conference call. Realisations in Q3FY20 declined 5.7 per cent to Rs 4.7 lakh despite price hikes taken by the company on account of introduction of new safety regulations and migration of the petrol portfolio to BS-VI. Analysts at Kotak Institutional Equities had expected revenues to increase by 16 per cent y-o-y led by a 9 per cent increase average selling price. —FE

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