India’s largest automobile player, Maruti Suzuki India Limited, is expected to post healthy revenue and net profit growth in the December quarter, on the back of a favourable product mix and improved volumes.
The 4-wheeler major’s profit is expected to increase 21 percent on-year to Rs 2,838 crore for October to December quarter, according to an average of seven brokerage firms’ estimates. Its revenue from operations is projected to rise 15 percent on-year to Rs 33,385 crore, estimates suggest. The company clocked a profit after tax of Rs 2,351.3 crore during the same period last year.
At 1:30 pm, the counter was training at Rs 10,007, up 0.2 percent from the previous close on the NSE. In the last year, the stock has given a return over 13.5 percent, lagging the Nifty which gave a return of 21 percent during the same period.
Analysts suggest that the revenue growth would be aided by an improvement in volumes and a higher realisation of 6.3 percent YoY due to price hikes and a richer product mix for the company.
This, in turn, could give a boost to the Wagon-R makers’ earnings before interest, tax, depreciation and amortisation (EBITDA), which is expected to increase 34 percent on-year to Rs 3,801 crore. It reported an EBITDA of Rs 2,833 crore during the corresponding quarter of the previous year.
However, on a quarter-on-quarter basis, the EBITDA margin is expected to decline about 100 basis points to 11.9 percent largely due to higher discounts and weak operating leverage.
“Going ahead, factors such as a superior product mix due to a higher share of utility vehicles, operating leverage due to normalised semiconductor availability, and cost optimisation are likely to continue”, KRChoksey said in a recent note on the company.
Analysts at Nuvama Institutional Equities suggest that the company’s passenger vehicle segment will grow by 13 percent on-year. On the other hand, Mahindra and Mahindra have outpaced the industry with a passenger vehicle revenue growth of 26 percent YoY for MM’s auto division. “Japanese Yen’s depreciation against the INR is also a positive for the company”, it stated in a report.
(With inputs from agencies)