Maruti Suzuki Q2'FY25: Weakness in volume hits profit

Maruti Suzuki Ltd today posted 17.4% decline in its net profit for the August-September quarter on a year-on-year basis with revenue remaining flat from the comparable period.

The fall in net profit primarily reflects a one-time cost related to deferred tax. The decrease in quarterly sales volume and elevated discounting levels dented the company’s operating profit.

India’s largest passenger car maker’s standalone profit for the quarter came in at Rs 3,069.2 crore, against Rs 3,716.5 crore in the year-ago period. Revenue from operations totaled at Rs 37,202.8 crore compared with Rs 37,062.1 crore.

Maruti Suzuki noted that there has been a provision of Rs 837.6 crore resulting from the withdrawal of indexation benefit and change in tax rate on long-term capital gains on debt mutual funds as per the Finance Act 2024.

On the operating profit front, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), declined 7.7% on year to Rs 4,416.6 crore. At the same time, the operating profit margin, or EBITDA margin, shrunk to 11.9% from 12.9% in the year-ago period, as per our calculations.

Volume was the biggest drag on earnings during the second quarter, as the automaker reduced dealership dispatches amid a high inventory pile-up. A high base in the previous year as well as weakness in the small car demand have been pulling the passenger vehicle from taking off.

Maruti Suzuki dispatched a total of 5.42 lakh vehicles in the three months, compared with 5.52 lakh units in the year-ago period. Domestic volume declined 3.9% to 463,834 lakh units, while exports improved by 12.2% to 77,716 units.

While the drop in volumes and higher discounts dented the company’s operating performance, a better mix of higher-margin cars, softening of raw material prices, and favorable foreign exchange gave little support to the profitability and helped to partly offset the impact.