Maruti Suzuki Q2 net seen down 10.4% YoY at Rs 215 cr
It has been a potholed road in the second quarter for Maruti Suzuki given the labour unrest at Manesar, continued pressure on demand and higher discounts offered to boost petrol car sales. So expect a weak results announcement on Tuesday.
October 30, 2012 / 12:00 IST
Moneycontrol Bureau
It has been a potholed road in the second quarter for Maruti Suzuki given the labour unrest at Manesar, continued pressure on demand and higher discounts offered to boost petrol car sales. So expect a weak results announcement on Tuesday.The India's largest passenger car maker is expected to report a net profit of Rs 215 crore in July-September, down 10.4% from a year ago and 50% sequentially, according to a CNBC-TV18 poll. On a year-on-year basis, its revenue is expected to rise just 2.7% and decline 25% quarter-on-quarter at Rs 8,050 crore. Earnings before interest, taxes, depreciation and amortization (EBITDA) is seen down 11% year-on-year and 44% sequentially at Rs 440 crore and operating profit margin is expected at 5.4% in July-Sep, compared with 7.3% in April-June and 6.3% a year ago.Maruti had shut the Manesar plant following a workers unrest that left a general manager dead and 96 supervisors and managers injured, many with fractures, on July 18. The plant re-opened on Aug 21 and under heavy security with the company slowly ramping up production there. The company lost production of 1,700 units per day during the lock-out at Manesar. It makes Swift hatchback and DZire sedan, both among its top selling cars, at the plant.The strike apart, the demand for its small cars like Alto, A-Star and Wagon R, which are mostly petrol driven, has remained sluggish due to high fuel prices and expensive loans. Maruti like other car makers offered higher discounts to drive small car sales, which in turn put pressure on margins.“Maruti's Q2 performance is expected to be impacted due to supply constraint in diesel cars given recent labor unrest at its Manesar plant. Moreover, margins will be hit by (1) weak petrol car demand and consequent high discounts, (2) lag impact of unfavorable currency movement in Q1, and (3) recent wage hike negotiated with workers (assuming first half provisioning happens in Q2)," said Motilal Oswal analysts Jinesh Gandhi and Chirag Jain.KEY THINGS TO WATCH-- Sales growth in the second quarter and the outlook for the year ahead. It has already scaled down its sales guidance once to 5% from 10% for FY13.
-- Current situation at the Manesar and Gurgaon plants.
-- Q2 margins and realizations.
-- Comments on raw material costs and forex movements.
-- Demand for new launches like Alto 800 and any new products planned for the rest of the year.STOCK TALKCLSA has a "sell" rating on Maruti Suzuki with a target price of Rs 1,270. But most other analysts are still bullish on Maruti given that the labour issues have been settled and there has been a strong demand for its new launches like Alto 800 and Ertiga multi utility vehicle.Further more analysts feel, the recent cut in auto loan rates by banks will also boost sales growth in the festive season and beyond. The stock has gained 16.5% since June-end, outperforming the broader Nifty, which has gained 7.3% in the same period.Maruti shares closed down 0.3% at Rs 1,362.20 on NSE on Monday.
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