Key things to watch out for in Maruti Suzuki's Q4 earnings

After struggling with sharp slowdown in sales and a crippling labour strike at its Manesar plant, Maruti Suzuki has seen a surprising turnaround in January-March. The India's largest passenger car maker will report earnings on Saturday and is expected to post first rise in revenue in three quarters.

Maruti Suzuki's sales declined near 17% over April-December, as customers postponed buying due to expensive loans and a sharp rise in petrol prices, and a strike at its Manesar plant sent production schedule of its popular Swift hatchback for a toss.

Sales, however, have rebound since, rising 5% in Jan, 6.5% in Feb and 3% in March, as customers rushed to book their cars early to avoid paying a higher excise duty from April. The company also resolved labour issues at Manesar, which coupled with launch of new Swift and compact DZire models, has helped volumes rise 50% sequentially in the fourth quarter.

Demand for petrol vehicles like Alto, AStar and WagonR has remained slow though due to high fuel prices.

Maruti's average realizations are seen improving 13% year-on-year, but only 1% sequentially as impact of improved mix (higher sales of Swift and DZire) was partially offset by higher discounts on petrol variants, say Amit Kasat and Aniket Mhatre of Standard Chartered.

The company's EBITDA (earnings before interest taxes, depreciation and amortization) margins are also expected to rise over 200 bps quarter-on-quarter, helped by higher volumes, price hikes and yen depreciation to the rupee, says Ashvin Shetty of Ambit Capital.

Analysts on average expect Maruti's revenue will rise around 18-22% year-on-year. But net profit is expected to decline around 20-27% from a year ago.

On a sequential basis, the company's net profit is expected to more than double, while revenue are seen going up 45-55%.

Key things to watch out for:

- Sales growth in Jan-March.
- Volume outlook for the year ahead for the company and industry. Shashank Srivastava, Chief GM - Marketing said earlier this month that Maruti's sales in FY13 are seen up 7-10%, but the first half is likely to be tough.
- Raw material costs in Q4 and expectations for the next quarter.
- Pricing action going forward.
- Any talk on new launches in the current fiscal. It has already launched the Ertiga MUV earlier this month.
- Capex plans for 2012-13.
- Any commentary on currency hedges/outlook.

Maruti Suzuki shares closed up 0.04% at Rs 1,382.50 on NSE on Friday. Since Dec-end, the stock is up 50%. The wider Nifty index is up little over 12% over the same period.