Maruti Suzuki Q3 PAT seen down 64% at Rs 200 cr

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Maruti Suzuki , country's largest car maker, is expected to report profit after tax of Rs 200 crore in the third quarter of FY12, a fall of 64% as compared to Rs 565 crore in the corresponding quarter of last fiscal. 

Revenues are seen going down 21% to Rs 7,463 crore from Rs 9,494 crore year-on-year. Operating profit margin is likely to be at 5.5% in the quarter ended December FY12 versus 9.4% in a year ago quarter and 3.2% in the previous quarter.

On quarter-on-quarter basis, company's revenues are likely to go down 4.5% and PAT is seen going down 16%.

What to watch out for :

* Maruti's dissapointing performance last quarter will continue since full production resumes only January 2012 onwards.

* Slow volume ramp-up and Yen appreciation are main reasons for weak performance. 

* In Q3 October, volumes were the lowest in 3 years due to Manesar production strike. (Maruti lost total 85000 due to strike)

* Margins to drop further due to Yen appreciation versus rupee and high discounts due to competition.

* Realizations are likely to increase 0.5% QoQ (7% YoY), as blended discounts are sequentially lower owing to normalization of production for diesel models.

* Watch for drop in raw material costs and higher advertisement spends this quarter.

Q3 Volume growth

* Total volumes down 27.6% at 2.39 lakh versus 3.30 lakh
* Domestic down 29.3% at 2.11 lakh versus 2.99 lakh
* Exports down 11% at 27725 versus 31160 units

Maruti domestic sales trend

* Total domestic sales were down 29% YoY

* Maruti losing out maximum in the Van segment (Omni, Eeco), where volumes were down 18%.

* The entry segment (Alto, 800) also remains impacted as YTD volumes were down 17%.

* Both these segments were not affected by labour strikes, hence the big decline in YTD volumes remains a cause for worry.

Yen impact

a) Direct imports (14% of sales) hit due to JPY appreciation against USD (hedged at JPY/USD rate of 79-80)

b) Indirect imports affect with a lag of one quarter (around USD/INR at sub-50 levels)