Maruti Suzuki Q2 preview: Increase in volumes to drive earnings growth
India's largest car maker sold 3.93 lakh units in September quarter, registering a whopping 413 percent growth over previous quarter and 16 percent over a year-ago period.
October 29, 2020 / 07:25 AM IST
Maruti Suzuki India, the largest passenger vehicle maker in India, is likely to show double-digit growth across earnings parameters in Q2FY21 driven by 16 percent increase in volume YoY.
The profit is seen rising more than 17 percent on 15-18 percent growth in revenue in the quarter ended September 2020, while the operating profit margin is expected to be driven by positive operating leverage.
The country's largest car maker sold 3.93 lakh units in September quarter, registering a whopping 413 percent growth over previous quarter and 16 percent over a year-ago period.
"We expect revenues to rise by 15 percent YoY in Q2FY21 led by increase in volumes. We estimate EBITDA to rise by 36 percent YoY led by positive operating leverage despite YoY decline in gross margin due to a rise in input costs in Q2FY21," said Kotak Institutional Equities which sees 17 percent growth in profit YoY.
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Prabhudas Lilladher expects realisation to improve around 1.4 percent YoY on account of lower discounts and product mix, resulting in expected revenue growth of around 18 percent YoY.
The brokerage believes stable raw material cost and positive operating leverage will help margins turn positive at 10.8 percent (up 130bp YoY) versus (-21 percent) in Q1FY21.
The stock rallied 67 percent in the financial year 2020-21 following recovery in demand after easing lockdown measures, while in the September quarter, it was up 15.5 percent.