Demonetisation no speed breaker, Maruti net zooms 48% to ₹1,744 cr Wipro misses expectations, profit dips 1%
Maruti Suzuki India Ltd has seen a 48% jump in net profit in the December quarter from a year ago, with India’s largest carmaker managing to grow sales, albeit marginally, even as many of its peers are coping with declines.
The company said net profit rose to ₹1,744.5 crore in the three months ended December, from ₹1,183 crore a year ago. It narrowly missed the ₹1,770 crore estimate based on the average of 28 analysts polled by Bloomberg. Net sales grew to ₹19173 crore, against ₹16,957 crore a year ago.
In a statement, Maruti attributed the performance to the increase in the market share of its premium models, lower sales and marketing expenses, cost-reduction initiatives, and higher nonoperational income. “This was partially offset by the increase in commodity prices and adverse foreign exchange movement during the quarter,” it added.
Maruti sold a total of 387,251 vehicles in the third quarter, a growth of 3.5% over the same period a year ago. Of this, exports stood at 30,748 units.
Maruti’s sales numbers come in the backdrop of the November 8 withdrawal of high-value currency notes, which triggered a cash crunch and prompted many prospective customers to defer purchases. Automobile sales in December declined 18.66%, the most since December 2000 when they fell 21.81%, according to data from the Society of Indian Automobile Manufacturers (Siam).
At its September quarter earnings press conference, Maruti cautioned that its margins would come under pressure when it starts buying cars from parent Suzuki Motor Corp under a contract manufacturing tie-up, which comes into effect this quarter. During any expansion, fixed costs remain high until the company attains full capacity, but they start moderating as capacity utilisation improves. Suzuki’s plant in Gujarat is expected to be operational by February, solving its Indian subsidiary’s capacity woes. Maruti will buy vehicles from Suzuki Motor Gujarat at cost price.
The Japanese yen has strengthened against the dollar in the past three months. A strong yen makes imports from Japan costlier and that may also be a key factor during March quarter.
In a statement to shareholders, Maruti MD Kenichi Ayukawa said Haryana State Industrial and Infrastructure Development Corp Ltd (HSIIDC) had raised demands of ₹1,031.7 crore towards “enhanced compensation to landowners for the company’s freehold land at Manesar, Haryana”. The company has made a payment of ₹374.20 crore under protest and capitalised it as part of the cost of land, he added. The matter is pending before the Supreme Court.
Maruti’s shares rose 1% to ₹5,796.80 on the Bombay Stock Exchange on Wednesday.
Wipro Ltd reported third-quarter revenue that missed analysts’ estimates, although it was in line with the management’s forecast. The company also provided a weak outlook for the fourth quarter, mirroring the challenges faced by rivals in the country’s $150-billion outsourcing sector.
Wipro on Wednesday said its dollar revenue declined 0.7% sequentially to $1.9 billion (0.6% rise in constant currency terms), after it had earlier outlined quarterly growth of at-best 2% in constant currency terms in the third quarter. Net profit declined 1% to $309 million from $312 million in the preceding quarter.
Bloomberg had estimated revenue of ₹13,678.7 crore and profit of ₹2,094.6 crore.
Wipro expects between 1% and 2% revenue growth in constant currency terms in JanuaryMarch. CEO Abidali Neemuchwala said it would take at least three-four quarters for the steps he has taken to bear fruit.
Infosys recently reported a 1.4% sequential drop in dollar revenue in the third quarter and cut its full-year revenue outlook, while TCS posted a 0.3% dollar revenue growth.