Country's largest car manufacturer Maruti Suzuki is likely to disappoint the street on April 26 by reporting contraction in profit and margin for January-March quarter. Profit is seen falling 3.4 percent year-on-year to Rs 1,240 crore in Q4, which may get impacted by lower margin, according to average of estimates of analysts polled by CNBC-TV18.
Revenue may increase 9.2 percent to Rs 14,885 crore in quarter ended March 2016 compared to Rs 13,624.8 crore in same quarter last fiscal, despite slow down in volume growth.
Maruti sold 3.6 lakh units in Q4, a growth of 4 percent compared to 3.46 lakh units sold in year-ago period. Volume was hit due to production loss of 10,000 units in February on account of Jat reservation agitation in Haryana. Company temporarily suspended production due to disruption of component supplies.
Domestic volume increased 5 percent YoY to 3.33 lakh units while exports declined 8 percent to 27,009 units in same quarter.
Operating profit (earnings before interest, tax, depreciation and amortisation) may increase 3.9 percent to Rs 2,250 crore but margin may shrink by 70 basis points to 15.1 percent in Q4 due to high discounts and yen appreciation.
Discounts rose 26 percent YoY to Rs 18,500 per unit against Rs 15,000 per unit. Discounts in Q3FY16 stood at Rs 21,900 per unit.
In Q4, yen has appreciated 2.6 percent to 115 against the US dollar YoY while Maruti hedged at 120.
However, analysts say margin may improve QoQ as margin in Q3 was impacted by inventory reduction and bonus act.
According to them, company's average selling price (ASP) may improve 2 percent QoQ due to January price hike (especially for Baleno). Better product mix helped by Brezza and higher Ciaz sales may result in higher ASP.
Product mix may improve as larger cars (Ciaz, Ertiga, Brezza, Dzire, Baleno) contribute to 34 percent of volume in Q4 against 33 percent in Q3.
Important point to monitor will be its guidance. According to news reports, Maruti may approve volume and sales guidance for FY17 at its board meet on Tuesday.
The company generally does not announce any guidance but RS Kalsi, Executive director had said (in earlier interviews) that Maruti is confident to deliver double digit volume growth in FY17.
Most analysts expect 13-14 percent volume growth for FY17.
If the company scales down this guidance for FY17 from double digits to single digit, it will be taken negatively by the street.
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