Maruti Suzuki Q2 Preview: Revenue, net profit to remain flat on tepid volume, demand

The Maruti Suzuki stock has tanked over 9 percent in the past six months.

Maruti Suzuki, India's largest four-wheeler manufacturer, will release its earnings report for the second fiscal quarter of FY25 on October 29. A decline in volumes and demand slowdown concerns are expected to hamper the company's sales significantly on a year-on-year basis.

According to a Moneycontrol poll of eight brokerage firms, the Wagon-R maker is anticipated to record just a 0.5 percent year-on-year revenue increase, reaching Rs 37,128 crore. Net profit is projected to remain flat at Rs 3,791 crore from Rs 3,788 crore in the same quarter of the previous fiscal year.

Earnings estimates from analysts polled by Moneycontrol are in a narrow range, indicating that any positive or negative surprises could trigger a sharp reaction in the stock price.

What factors are likely to hurt the auto major?

Weakening demand: Four-wheeler volumes for Maruti Suzuki declined 2 percent on-year, while the total domestic volumes slipped 7 percent, largely led by a slowdown in entry-level cars and high discounting. However, experts suggest that this may be partly offset by a better mix mainly consisting of sports utility vehicles (SUVs).

Steady EBITDA: "The earnings before, interest, tax, depreciation and amortization (EBITDA) margin could slightly outpace the topline growth YoY and margins likely to improve 12.7 basis points year-over-year on richer product mix, favourable forex and raw material tailwind over the last year," Axis Securities said in its Q2 preview report.

UV mix may help: Prabhudas Lilladher believes Maruti Suzuki will benefit from its increasing presence in the utility vehicle (UV) segment, both domestically and internationally. The firm also points to Maruti’s margin improvement potential, aided by operating leverage, cost reductions, and a stronger product mix, along with its robust hybrid technology portfolio. Moreover, Maruti’s planned launch of its maiden electric vehicle (EV) in FY25 is expected to broaden its range across multiple powertrains.

The passenger vehicle (PV) segment has been in deep trouble of late. Sales plunged by 10 percent MoM and a striking 18.81 percent YoY, highlighting a troubling trend of waning consumer interest and growing market pessimism. The combination of seasonal lulls, heavy rains, and an overall sluggish economy has left dealers sitting on alarmingly high inventory levels—around 7.9 lakh vehicles worth Rs 79,000 crore, according to FADA data, with inventory stretching to 80-85 days.

What to look out for in the quarterly show?

Key things to watch out for are demand outlook as several experts have suggested that a slowdown is on the cards due to a high base, and an increase in vehicle financing costs. Furthermore, the outlook for rural and entry-level cars is a crucial determinant of the company's performance in the coming quarters.

Maruti Suzuki shares ended the week at Rs 11,490, lower by 2.3 percent from the last close. The Maruti Suzuki stock has tanked over 9 percent in the past six months.

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