Maruti Suzuki India Q1 Net Profit Grows 4.4% At Rs 15,564 Million

Indian automobile manufacturer Maruti Suzuki has reported 4.4 per cent growth in net profit for the first quarter of current financial year (April-June, 2017) and stood at Rs 15,564 million. The company has attributed this growth to higher deferred tax provision.

The company sold 394,571 vehicles in the quarter, representing a growth of 13.2 per cent over same period previous year. Of this, exports were at 26,140 units.

Maruti Suzuki India’s net sales stood at Rs 171,324 million, thereby witnessing a year-on-year increase of 16.7 per cent when compared with first quarter of last fiscal.

Growth in volumes, favourable product mix, higher non-operating income and cost reduction efforts contributed to increase in profits, the company said in an official statement.

However, it added, that costs were impacted by higher commodity prices, and sales promotion and marketing expenses. During the quarter there was a one-off impact of compensation given to dealers for the tax loss incurred on vehicles in the stock at the time of transitioning to goods and services tax (GST).

Shrikant Akolkar (Research Analyst - Auto & Auto Ancillary, Angel Broking) said, “Maruti Suzuki’s Q1 FY18 earnings and margins are below the consensus estimates. The key highlight of the result is the 21 per cent increase in the material cost which has led to the decline in the gross margins to 29.96 per cent, lowest since Q2 FY15. Net realizations grew 3 per cent year-on-year, slowest in the last 6 quarters. Material cost per unit accelerated by nearly 7 per cent, which mainly led to decline in the operating margins.”

“While the result is below the consensus estimates, this kind of result was already anticipated due to the rise in the raw material costs as well as discounts offered due to the GST. The demand is expected to be strong going ahead and with the premium vehicles in demand, we continue to maintain a positive outlook on the stock.”