Maruti’s revenue rises 10% as car sales increase but high commodity prices dampen profit

• Maruti Suzuki reported a 0.95% growth in its profit to ₹1371.60 crore between July and September quarter.
• The company’s revenue from operations grew 10% to ₹18,744 crore.
• The company said its material cost increased by 70 bps, nearly a per cent higher compared to the same quarter last year.
• Maruti’s share price shed over 2% post the result announcement.

India’s largest carmaker Maruti Suzuki turned profitable after a quarter full of loss. Maruti Suzuki reported a 1% growth in its profit to ₹1,371.60 crore between July and September quarter compared to the same time last year. However, this is much better compared to the last quarter, when it reported a net loss of ₹249.4 crore for the first time in a decade.

The company’s revenue from operations grew 10% to ₹18,744 crore. The company’s operating profit increased 71.70% YoY to ₹1167.70 crore.

“In Q2, the performance improved on the back of some demand recovery and gradual improvement in supply conditions. Production across the company’s factories and supply chain was progressively ramped up consistent with our policy of maximum safety of the people and following all prescribed protocols to ensure this,” Maruti Suzuki said in a statement.

Despite the decent profit growth in the revival quarter, Maruti could not meet street expectations. According to various analysts reports, the company was slated to see a 15% jump in its revenue, leading to profit growth of 14.6% in the quarter under review.

And, that is the reason the share price shed over 2% post the result announcement. However, the company sold 16.2% more cars in the second quarter compared to the same period last year.

High commodity prices kept the profit growth low

The company said its material cost increased by 70 bps, nearly a percent higher compared to the same quarter last year. “Higher sales volume, lower sales promotion expenses, lower operating expenses and cost reduction efforts partially offset by an increase in commodity prices and adverse foreign exchange movement,” the company said.

Maruti’s margins expanded 240 bps to 6.6% in the quarter under review

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