Maruti Suzuki Q1 Preview: Net profit may zoom 142% on volume growth, sales mix

Maruti Suzuki India Limited, the country's leading automobile manufacturer, is expected to report solid numbers for the first quarter today, powered by healthy volume growth, price hikes and a richer product mix.

An average of five brokerage firms estimates Maruti's net profit to zoom about 142 percent over last year to Rs 2,400 crore from Rs 1,012 crore. The analysts pegged a 20 percent growth in the auto major's revenue from operations for the quarter under review as against Rs 25,500 crore last year.

Maruti's revenue quarter-on-quarter is likely to remain flat due to a 3.3 percent decline in volumes, offset by higher realisations.

EBITDA or earnings before interest, tax, depreciation and amortisation, is poised to increase about 70 percent to Rs 3,276 crore, the Moneycontrol research indicates, from Rs 1,912 crore in same period last year.

Its EBITDA margins will likely increase to about 10 percent, up 241 basis points from the corresponding quarter last fiscal. Brokerage firm BNP Paribas suggests that lower operating leverage is partially offset by lower commodity prices, cost control and a superior sales mix.

In terms of sales volumes, there is an estimated 6 percent growth on-year, reaching about 5 lakh units, on the back of new models and discounts on lower-end models. Realisations are estimated to increase 10.2 percent to approximately 6.23 lakh per unit.

The market will watch out for the management commentary from MSIL about its new products in the sports utility vehicle (SUV) space. With launches such as Jimny, Fronx, and Invicto, Maruti has an appetite to capture the SUV pie. Analysts tracking the company are bullish and suggest that its earnings in the coming quarters would surge on the new items.

"Till last year, there were concerns about how successful Maruti will be in the SUV space and, since then the company has launched three models and the initial response has been quite encouraging," Kumar Rakesh, lead analyst at BNP Paribas, told Moneycontrol. He goes a step further to say he won’t be surprised if Maruti comes to be known more as a full-blown SUV player than as a leader in the compact car segment, which it has been historically.