Maruti Suzuki India’s Q1 margin hit due to rising commodity prices

India's largest carmaker, Maruti Suzuki India’s Q1 margins hit multi-quarter lows and the Q1FY2022 profit slipped significantly from Q4FY2021 due to rising raw material prices. 

MSIL's Q1FY2022 net revenue came in at Rs 16,798.7 crore compared to Rs 3,677.5 crore revenue recorded in Q1FY2021. The jump seems significant on account of a lower base in the first quarter of last fiscal. Profit after tax (PAT) in Q1 stood at Rs 440.8 crore. Though this looks as a significant improvement from the net loss of Rs 249.4 crore clocked in Q1FY2021, a closer look at the sequential results tells a better picture of its overall performance. Sequentially, there was over 62 percent decline in profit compared to Rs 1,166.1 crore PAT clocked in Q4FY2021.

The company says the margins were primarily impacted due to lower sales volumes and rising commodity prices, which, “are continuously being countered by taking several cost-reduction measures”, as per its statement. 

However, pent-up demand in the market was a silver lining for the passenger vehicle major in Q1. The company sold 308,095 units between April and June, 2021, registering a near five-fold sales growth YoY. Just to remind our readers, Q1FY2021 was a washout one, in terms of auto sales due to nationwide lockdown in the month of April. Hence, for perspective, its Q1 FY2022 results are still a notch lower than FY2019 sales of 363,417 units in the domestic market.

In terms of exports, the despatches stood at 45,519 units (Q1 FY2021: 9,572). Exports in FY2019 stood at 127,062 units. 

Moreover, it also mentioned in a statement that Osamu Suzuki who retired as the Chairman of the Board of Suzuki Motor Corporation earlier this year in June, will continue to serve on MSIL's Board and has been conferred the title of 'Honorary Chairman'.