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Maruti Suzuki Q3 profit up 24% YoY, here are highlights of analyst call

Overall costs would go up due to an increase in expenses such as marketing, though some cost reduction would be sustainable, the company has said.

January 29, 2021 / 02:31 PM IST
Maruti Suzuki Ertiga

Maruti Suzuki Ertiga

 
 
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Maruti Suzuki reported a 24.1 percent year-on-year (YoY) rise in Q3FY21 standalone net profit at Rs 1,941.4 crore against Rs 1,564.8 crore in the corresponding quarter of the previous financial year.

The company reported a 13.3 percent YoY rise in Q3 standalone revenue at Rs 23,457.8 crore against Rs 20,706.8 crore in Q3FY20.

Here are the highlights of Maruti's Q3 FY20 earnings call compiled by Narnolia Financial Advisors:

According to the Maruti management, demand momentum continued in the third quarter and sales were at similar levels as of last year. Rural sales penetration grew by 40 percent YoY for the quarter. Replacement demand has seen a sharp fall from 26 percent last year to 19 percent this year because people are continuing with old vehicles and also there is an increase in demand of pre-owned vehicles.

The company ramped up production and made full capacity utilisation in 3QFY21. Its overall capacity utilisation would be at 75 percent for FY21.

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The company has an order backlog of 2,16,000 units. Its LCV-Super carry has become the second most selling mini-truck in the domestic market. Recently, the company commenced export of Jimny, which will be shipped to Latin America, the Middle East and African markets. The company is evaluating prospects of its launch in India but nothing has been decided yet.

CNG vehicle sales grew by 18.9 percent YoY. The company has current channel stock of 21,000 units.

Retail financing

Finance penetration is normal as of now and is seen in the range of 80 percent. The company’s exports for 3QFY21 amounted to Rs 1,318 crore. Its average discount was Rs 20,185. Royalty for the quarter was 4.59 percent as against 5 percent in 2QFY21, the company said.

Price was hiked in the Rs 6,000-Rs 34,000 range, including taxes. The company’s digital sales inquiry grew from 3 percent in FY03 to 15-16 percent in FY20 to 35 percent in FY21. There is further visibility of significant commodity price increase and its impact would be seen in 4QFY21 for the company, the management added.

EBITDA margin expanded by improved capacity utilisation, lower sales promotion expenses and various cost-reduction efforts adopted by the company. Some industry players have seen a shortage of semiconductors and similar products though the impact is not visible, so far, for the short term.

Dynamic royalty regime

All (90-97 percent) new models would move to calculation from rupees and royalty amount would be more stable by FY23. Path to the Indian electric vehicle (EV) market will be through hybrid vehicles and also depend on the use of alternative fuels like CNG. Overall cost would go up due to increase in various expenses like higher marketing expenses due to more new models, etc. Though some cost reduction would be sustainable considering efforts done by management for same, the company added.
Moneycontrol News
first published: Jan 29, 2021 02:31 pm

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