Maruti Suzuki sees over fourfold jump in Sep quarter net profit

NEW DELHI: Maruti Suzuki India Ltd, the country’s largest carmaker, saw an over fourfold surge in profit, beating analysts’ estimates, as the easing of chip shortages boosted production and favourable currency movements reduced costs.

Net profit rose ₹2,061 crore in the quarter ended 30 September from ₹475 crore a year ago, the company said. That compares with the average estimate of ₹1,809 crore, according to data compiled by Bloomberg.

Sales of higher-priced models rose as the acute semiconductor shortage that severely constrained production in the past quarters eased. In addition, the weakening of the Japanese yen against the Indian currency helped lower import costs and reduced royalty payments to parent Suzuki Motor Corp.

Shares of Maruti surged 5% to close at ₹9,494.10 on BSE after it announced earnings.

Sales rose 36% to a record 517,395 vehicles during the September quarter. That drove total revenue 46% to ₹29,931 crore, beating estimates. The average selling price of vehicles sold by the company increased by 7% from a year earlier.

However, the company is still not back to full capacity utilization and highlighted that a

“shortage of electronic components impacted production by about 35,000 vehicles in this quarter”. Earlier, Maruti set a target of achieving 2 million units in production in FY23. Total production in the first half of the year fell just short of the one million mark.

Maruti expects the passenger vehicle market to grow 8% next fiscal, with the company’s growth trajectory more or less mimicking the same trend, R.C.

Bhargava, chairman of Maruti Suzuki, said in a post-earnings call. While Bhargava expects the passenger vehicle industry to surpass the pre-covid peak volume this fiscal, Maruti’s volume will just about hit that peak, as a contraction in the small car market over the last three years has adversely impacted the company. “We have not given up our challenge of reaching 2 million units (this fiscal). But the major determinant of our ability to succeed is going to be semiconductor availability. Currently, there is a constraint from one supplier that is impacting some models. We don’t know what the supply is going to be in the next five months,” Bhargava said.

The carmaker has one of the largest numbers of pending customer orders at about 412,000 at the end of the quarter, out of which nearly 130,000 are for recently launched models.