Maruti Suzuki posts 60% jump in Q2 net profit
India’s largest automobile manufacturer, Maruti Suzuki, controlled by Japan’s Suzuki Motor Corp had posted a 60.18 percent year-on-year growth in September quarter profit at Rs 2,398 crore compared with Rs 1,497 crore reported for the year-ago quarter.
According to a report in Reuters, analysts had predicted a Q2 2016 profit of Rs 1,792 crore. The company also reported a 29 percent rise in income from operations from Rs 15,700 crore in the year-ago quarter to Rs 20,297 crore in 2016.
“Higher volumes leading to higher capacity utilisation, lower expenses on sales promotion and marketing and higher non-operating income contributed to increase in profits, This was partially offset by foreign exchange movement,” the company said in a filing to BSE.
In a report of NDTV auto, RC Bhargava, Chairman of Maruti Suzuki India said, “Maruti is well on track to achieve double-digit growth this FY 2017 and is very optimistic about it.” One of the main reason for such high profit has been attributed to was the sales of the Baleno premium hatchback and the newly launched Vitara Brezza subcompact SUV. In fact, Maruti Suzuki has sold over 1 lakh units of the Baleno hatchback in India ever since the launch of the car in October 2015 and over 50,000 unit of the Vitara Brezza that went on sale in March 2016.
According to the reports, the company sold a total of 418,470 vehicles during the quarter which translates into growth of 18.4 per cent over the corresponding quarter of last fiscal. Sales in the domestic market stood at 3,83,030 units which translate into growth of 18.5 per cent. Exports stood at 35,440 units, up 17.9 per cent on a YoY basis. Margins came in at 17 per cent for the quarter.
Reportedly, during April – September 2016-17 FY it recorded the sales of a total of 766,913 vehicles, registering a growth of 10.4 per cent. The domestic sales, at the same time, stood at 705,370 units a growth of 12.1 per cent, whereas exports accounted for 61,543 units. Reportedly, Bhargava did feel that foreign exchange has had a slightly negative impact on numbers, though. The Company’s net sales stood at ₹ 322,806 million in April-September 2016-17, which brought a growth of 20.9 per cent over the same period last year.
“Maruti results look exceptionally strong and definitely. But valuations headroom seems to be limited from here on, even if they consider a good 20 per cent growth next year in volumes. If the exports from Gujarat plant starts growing materially, then definitely this stock is there for further upside,” said Prayesh Jain of IIFL.