Lower sales volumes, high commodity prices and lower non-operating income pulled Maruti Suzuki’s net profit down 48% to Rs 1,011 crore during the December 2021 quarter although the carmaker beat Bloomberg consensus estimates of Rs 913 crore. While its non-operating income fell 67% year-on-year, purchases of stock-in-trade rose 23% during the quarter.
Investors cheered the better-than-expected earnings and the stock surged as much as 6.9% on the BSE on Tuesday to close at Rs 8,600.60, the highest levels since September 2018. It was also the best performing stock in the Sensex.
Net sales were flat at Rs 22,187 crore with production constrained by a global shortage of electronic components. As a result of this, 90,000 units could not be produced, though this was better than in Q2FY22 when 1.16 lakh vehicles could not be produced.
Maruti’s operating margins declined 278 basis points y-o-y to 6.7%, driving down the earnings before interest, tax, depreciation and amortisation (Ebitda) to 30%. Nonetheless, this is better than the multi-year low of 4.16% in Q2FY22 although lower than the 9.5-10% of the pre-pandemic times. The company has been able to take price increases and rein in discounts on the average selling price.
A company statement said that though the demand remained intact, the supply side situation was uncertain, even though the availability of semi-conductors continued to improve gradually. “There was no lack of demand as the company had more than 2,40,000 pending customer orders at the end of the quarter. Though still unpredictable, the electronics supply situation is improving gradually. The company hopes to increase production in Q4, though it would not reach full capacity,” the statement said.
Maruti sold 4,30,668 units during the December quarter, 13% lower on a y-o-y. In the domestic market, the sales declined nearly 22% y-o-y to 3,65,673 units versus 4,67,369 units in Q3FY21. The company clocked its highest ever exports at 64,995 units, nearly 2.5x as compared to 28,528 units in the third quarter of last financial year. This was also 66% higher than the previous peak exports in any Q3.
Maruti Suzuki chairman RC Bhargava had indicated post the Q2FY22 results the company may not post double-digit growth in the ongoing fiscal. He added that Maruti had been impacted because one of its vendors could not supply units due to the Covid-19 situation in Malaysia, where its plant was situated.