Maruti Suzuki Q2 preview: Net profit may rise 42% on benign commodity costs, product mix

Maruti Suzuki Q2 preview: Net profit may rise 42% on benign commodity costs, product mix

Maruti Suzuki, as India’s largest OEM manufacturer, is anticipated to announce a significant 42 percent increase in net profit for the quarter ended in September. This positive projection can be attributed to several factors, including a favorable product mix, price adjustments made by the company, and a reduction in commodity prices. These combined factors have likely contributed to Maruti Suzuki’s strong financial performance during this period.

According to the average estimates provided by five brokerage firms, Maruti Suzuki is expected to declare a net profit of approximately Rs 2,921 crore for the second quarter, marking a substantial increase from the Rs 2,061 crore recorded during the corresponding period the previous year. This anticipated growth indicates the company’s ability to capitalize on market trends and leverage various strategies to enhance its financial performance.

However, as of 2:30 pm, Maruti Suzuki’s stock was trading at Rs 10,449, reflecting a 1.3 percent decrease from the previous closing value on the National Stock Exchange (NSE). This slight dip in stock value might be influenced by several market factors and short-term fluctuations and may not necessarily reflect the overall market sentiment towards the company’s future prospects.

Investors and stakeholders should closely monitor Maruti Suzuki’s official earnings announcement on October 27 to gain comprehensive insights into the company’s financial performance and strategic outlook, which will offer a clearer perspective on its trajectory within the automotive industry and the broader market.

Maruti Suzuki’s impressive financial performance is further highlighted by the expected increase in revenue from operations, which is projected to reach approximately Rs 35,218 crore for the quarter, representing a significant growth of over 23 percent compared to the corresponding period last year. This substantial surge in revenue emphasizes the company’s ability to capitalize on market opportunities and adapt to changing consumer preferences, ultimately strengthening its position within the automotive industry.

The estimated EBITDA margin of around 11.1 percent, indicating an increase of more than 180 basis points year-on-year, underscores Maruti Suzuki’s effective management of operating costs and the successful implementation of strategies to maximize operational efficiency. Factors such as operating leverage, a favorable product mix, and the softening of commodity prices have contributed significantly to this positive margin expansion, showcasing the company’s adeptness in navigating market challenges and leveraging favorable industry dynamics.

The analysis provided by domestic broking firm Prabhudas Lilladher further underscores Maruti Suzuki’s positive outlook, particularly within the SUV segment, which has reportedly yielded successful results for the company. The anticipation of industry-leading volume growth suggests the potential for Maruti Suzuki to regain some of its market share losses, signifying the company’s resilience and ability to adapt to evolving market dynamics.

Moreover, the impending launch of Maruti Suzuki’s first electric vehicle (EV) model in FY25 underscores the company’s commitment to embracing sustainable and eco-friendly mobility solutions, aligning with global trends towards electric and cleaner transportation alternatives. This strategic move not only highlights Maruti Suzuki’s focus on innovation and technological advancement but also positions the company to capitalize on the growing demand for electric vehicles in the Indian market and contribute to the broader push towards a more sustainable automotive ecosystem.

The analysis provided by InCred Equities highlights the positive impact of favorable commodity costs, particularly the sharp decline in precious metal prices, on Maruti Suzuki’s gross margin expansion. This trend, coupled with the beneficial movement in the Japanese yen and the strengthening of the US dollar, is expected to provide a favorable operating environment for the company. These currency dynamics have the potential to benefit both Maruti Suzuki’s imports and exports, reinforcing the company’s competitive position and overall profitability.

The insights shared by KRChoksey emphasize Maruti Suzuki’s successful management of electronic component availability, enabling the company to increase the sales volume of sports utility vehicles (SUVs) and consequently improve its product mix. Notably, the recent additions of Invicto, Jimny, Fronx, and Grand Vitara to Maruti Suzuki’s SUV portfolio underscore the company’s proactive approach to product diversification and market responsiveness. This strategic expansion of its SUV offerings further solidifies Maruti Suzuki’s presence in the SUV segment, reflecting its commitment to meeting evolving consumer demands and preferences.

Additionally, Axis Securities’ acknowledgment of Maruti Suzuki’s robust marketing reach and distribution network highlights the company’s strong market presence and its ability to effectively engage with a broad customer base. Maruti Suzuki’s extensive distribution network serves as a key asset in facilitating market penetration and driving sales growth, contributing to its sustained market leadership and competitive advantage within the automotive industry.

The projected growth of Maruti Suzuki’s UV (utility vehicle) mix to 33 percent, representing a substantial increase of 25 percent quarter-on-quarter, signifies the company’s effective product strategy and its successful response to shifting consumer preferences. This anticipated growth in the UV segment further underscores Maruti Suzuki’s adaptability and agility in capturing market opportunities and strengthening its position in the rapidly evolving automotive landscape.