India's largest carmaker Maruti Suzuki India on April 27 reported a 9.7 percent year-on-year (YoY) decline in profit at Rs 1,166.1 crore for the quarter ended March 2021, hit by lower-than-expected operating performance and a sharp fall in other income, but revenue was strong.
Revenue from operations in Q4 FY21 stood at Rs 24,023.7 crore, up 32 percent from Rs 18,198.7 crore in the year-ago period backed by strong double-digit growth in sales.
A CNBC-TV18 analyst poll had pegged profit at Rs 1,668 crore on revenue of Rs 23,624 crore. The New Delhi-based company reported a profit of Rs 1,291.7 crore in the year-ago period.
Maruti Suzuki sold 4,92,235 vehicles in the March quarter, up 28 percent YoY. "Sales in the domestic market stood at 4,56,707 units, growing by 26.7 percent. Exports were at 35,528 units, higher by 44.4 percent. It may be recalled that in Q4 of FY20 there was a significant decline in the sales volume largely owing to COVID-19 lockdown," the company said.
At the operating level, earnings before interest, tax, depreciation and amortisation (EBITDA ) grew 28.8 percent year-on-year to Rs 1,991.4 crore on account of higher sales volume and cost reduction efforts despite a steep rise in commodity prices.
EBITDA margin contracted 20 bps YoY to 8.3 percent in the March quarter. The margin performance was hit by adverse commodity prices, adverse foreign exchange fluctuation and lower fair value gains on invested surplus, though it was supported by improved capacity utilisation, lower sales promotion expenses, an increase in selling prices and cost-reduction efforts, the company said in a BSE filing.
The operating performance missed analysts' expectations. A CNBC-TV18 poll estimates for EBITDA and margin were at Rs 2,168 crore and 9.1 percent in Q4FY21.
Gross profit margin at 26.1 percent declined 360 bps YoY and 140 bps QoQ. Other income fell sharply to Rs 89.8 crore, compared to Rs 880.4 crore in Q4FY20 due to mark-to-market loss on invested surplus.
Tax expenses for the quarter halved to Rs 141.4 crore from Rs 284 crore in the year-ago period.
For FY21, profit declined 25.1 percent to Rs 4,229.7 crore compared to the previous year on account of lower sales volume, increase in commodity prices, adverse foreign exchange movement and lower non-operating income partially offset by lower operating expenses, and cost reduction efforts.
Revenue from operations fell 7 percent to Rs 70,332.5 crore compared to the previous financial year as the company sold 14,57,861 vehicles, 6.7 percent less than the previous year.
Maruti Suzuki said in line with the financial performance of the year and considering uncertain business environment, the board of directors
recommended a dividend of Rs 45 per share for FY21.
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The stock price has fallen 13.2 percent in 2021, underperforming the Nifty Auto that has gained 4.87 percent.
"Although a resurgence of COVID cases and high commodity prices are a near-term concern, we continue to remain optimistic for Maruti Suzuki, owing to increasing preference for personal mobility, low interest rate, strong rural presence and strong waiting period," Dolat Capital said.
The company recently hiked prices by around 1.6 percent to mitigate the impact of commodity inflation, the brokerage added.