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Maruti Suzuki Q3 earnings below estimates; highlights of analyst call

The management expects commodity cost to rise from Q1FY21, with increased used of precious metals in BS-VI engine.

January 31, 2020 / 03:42 PM IST
 
 
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India’s largest carmaker Maruti Suzuki India missed analyst expectations on all earnings, with profit growing 5.1 percent YoY to Rs 1,565 crore in the December quarter.

Its revenue grew by 5.3 percent year-on-year to Rs 20,707 crore and operating profit rose 8.9 percent to Rs 2,102 crore with margin expansion of 30bps YoY, numbers released on January 28 show.

The rising raw material cost as a percentage of sales YoY and QoQ impacted margin, while realisations fell 5.7 percent sequentially to Rs 4.7 lakh per unit.

Here are highlights of Maruti Suzuki's analyst call on earnings, collated by Narnolia Financial Advisors:

Management participants: Ajay Seth-CFO; Shashank Srivastava-Executive Director, Marketing & Sales; DD Goyal-Executive Director, Finance

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The management expects rural demand to pick up based on healthy monsoon and strong Rabi sowing. Rural areas contributes 38 percent of Maruti's volumes.

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There will not be any big impact of pre-buying for Maruti, as January will be the last month of BS-IV model production. The company has only nine days of BS-IV inventory.

The company will produce only petrol vehicles from February. Maruti has 60 percent market share in petrol cars.

The industry’s diesel penetration has fallen to 30 percent and for Maruti it stood at less than 20 percent.

The realization declined due to higher sales of entry segment cars, increased discounts and lower proportion of diesel cars.

Exports revenue stood at Rs 1,144 crore.

Discounts for the quarter stood at Rs 23,000 per car.

Royalty rate for the quarter was 5.4 percent.

The Gujarat plant production stood at 1,16,718 units for the quarter.

The company hiked prices by Rs 3,500-7,000 per car across models (3-5 percent increase).

The management expects commodity cost to increase from Q1FY21, considering the increase in precious metals prices. (Majorly used in BS-VI engine).

Capex guidance of Rs 4,000 crore for FY20 (spent about Rs 2,500 crore on 9MFY20 basis).

Normalise tax rate to remain in the range of 22-23 percent.

The localisation level stood at 87 percent on vendor basis.

The company added 81 new Arena stores in 9MFY20, taking the Arena store count to 2,700.

 
Moneycontrol News
first published: Jan 31, 2020 03:40 pm

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