Maruti Suzuki Q3 Preview: 13% volume growth to aid revenue, rich mix may help net profit rise 15%

Maruti Suzuki shares have gained nearly 11 percent since the start of the year.

New Delhi-headquartered Maruti Suzuki India Limited is set to release its earnings report for the third fiscal quarter of FY25 on January 29. Analysts expect a sharp uptick in revenue, driven by a strong product mix, higher average selling prices and a massive 13 percent rise in volumes. However, margins could face pressure due to higher advertising spending and discounts.

According to a Moneycontrol poll of seven brokerage firms, the Wagon-R maker is anticipated to record a 16.5 percent year-on-year increase in revenue, reaching Rs 38,838 crore. Net profit is projected to surge 15 percent to Rs 3,596 crore from Rs 3,130 crore in the same quarter of the previous fiscal year.

Follow our LIVE blog for all the latest market updates

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 driving Maruti Suzuki's earnings?

Stong volumes: Maruti Suzuki, India's largest four-wheeler manufacturer, will witness a 13 percent rise in volumes which will positively impact revenue growth during the third quarter. Despite the overall slowdown in the auto sector, the company has sold 5,66,213 units in Q3, higher than the 5,01,207 units sold in the same quarter last year.

Rich mix: Brokerages suggest that higher average selling prices due to a rich mix will likely also benefit the bottom line of the original equipment manufacturer (OEM). Motilal Oswal says that Maruti Suzuki is its top pick from the auto pack as its upcoming new launches are expected to continue to help improve the mix and drive healthy earnings growth.

EBITDA Contraction: EBITDA margins are expected to decline by 40 basis points year-on-year, dragged by an increase in discounts and a rise in advertising and promotion spending.

As Axis Securities says, "EBITDA margin is expected to decline due to higher marketing and advertisement spends, higher discounts being partly offset by richer product mix and operating leverage.

What to look out for in the quarterly show?

Key highlights to watch in the earnings report include insights into domestic demand trends and updates on new SUV launches. This year is particularly exciting as Maruti makes its debut in the EV space with its first electric vehicle. Investors will also keep a keen eye on management’s commentary regarding bookings for the much-anticipated EV.

Maruti Suzuki shares closed at Rs 11,994, higher by 0.2 percent from the last close on the NSE on January 27. Maruti Suzuki shares have gained nearly 11 percent since the start of the year.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.