Here's what to expect from Maruti Suzuki Q3 earnings
Maruti Suzuki will report its third quarter results on Friday, amid continued sluggish demand for passenger vehicles in the domestic market. But the India's largest passenger car maker will be buoyed by resumption of normal operations at Manesar plant, higher realisations and improved margins.
Maruti Suzuki will report its third quarter results on Friday, amid continued sluggish demand for passenger vehicles in the domestic market. But the India's largest passenger car maker will be boosted by resumption of normal operations at Manesar plant, higher realisations and improved margins.
The India's largest passenger vehicle maker by sales is expected to report a net profit of Rs 466 crore, more than double year-on-year, while total income from operations is seen at Rs 11,025.4 crore, up 40 percent, according to a CNBC Awaaz poll.
In the year ago quarter, Maruti's operations at Manesar were hit due to a labour unrest, and the company lost production of around 40,000 units. So the earnings figures should be taken into that context.
The company saw its sales volumes rise around 26 percent year-on-year in Oct-Dec, helped by the festive season uptick, continued strong demand for its diesel powered cars and the fact that operations at Manesar have now normalised.
Diesel vehicles accounted for around 40 percent of Maruti's total volumes, compared with a little over 30 percent in the second quarter.
The Swift hatchback and the DZire sedan are among the top selling cars in the market currently. Its Ertiga multi-utility vehicle, launched last year, has also got good response.
Its realisations last quarter are also expected to increase on the back of price hikes it took in October, increased proportion of diesel vehicle sales and lower discounts on petrol vehicles during the festive season.
Further, as 50 percent of its raw material imports are unhedged, Maruti could gain 50-60 bps on account of 6 percent depreciation in Yen versus the Rupee, according to a report by Prabhudas Lilladher.
The analyst Surjit Arora expects its margins will improve 120 bps sequentially, given the favourable currency movement, higher sales and better product mix.
Motilal Oswal expects Maruti's realisations will improve around 14 percent, with 200 bps year-on-year and 110 bps sequential uptick in margins.
Key things to watch
-- Retail demand post the festive season
-- Current trends with respect to discounts, inventory etc
-- Petrol - Diesel mix
-- Outlook for the fourth quarter and FY14
-- Road ahead for diesel vehicles, given that diesel prices have also been partially de-regulated
-- A light on new launches in 2013
Maruti Suzuki shares closed down 2.2 percent at Rs 1,538.80 on NSE on Thursday. Since Sept-end, the stock has gained 14 percent, outperforming the wider Nifty, which is up near 6 percent.
Brokerage CLSA upgraded the stock to "buy" from "sell" earlier this month, saying the earnings outlook for India's largest passenger car maker was finally improving after three years of gloom.
"Renewed focus on exports and launch of a new compact SUV will boost volume growth further. We expect Maruti’s EBITDA margins to recover to near 10 percent by FY15 driven by a weakening Yen, improving product-mix and rising localization. Earnings sensitivity to the Yen will drop as localization rises and exports pick up, which is a positive for multiples," it had said.