Maruti Suzuki Reports Record Year, Costs Dent Profit

Maruti Suzuki India Limited reported its financial results for the fourth quarter and full year ended March 31, 2026 on Monday, posting record consolidated revenue and unit sales for both periods. While operating performance was strong, net profit for the quarter fell short of prior-year and preceding-quarter levels, reflecting a combination of input cost increases, a higher tax outgo, and an unfavourable movement in investment income.

For Q4 FY2025-26, consolidated revenue from operations reached ₹52,462 crore, up 28.6% from ₹40,920 crore in Q4 FY2024-25 and 5.1% ahead of Q3 FY2025-26. Total income for the quarter was ₹52,946 crore. Consolidated net profit, at ₹3,659 crore, was 6.4% below the ₹3,911 crore reported in Q4 FY2024-25 and 5.7% below Q3 FY2025-26's ₹3,879 crore.

Operating profit versus net profit

The company's press release notes that Q4 operating profit (EBIT) rose 30.4% year-on-year to an all-time high of ₹4,409 crore, indicating that the gap between operating performance and reported net profit is explained by factors below the EBIT line rather than in core operations.

Two items account for most of this gap. Current tax for the quarter was ₹1,412 crore, compared to ₹871 crore in Q4 FY2024-25 — a 62% increase against a profit before tax that was essentially flat year-on-year at ₹4,918 crore. The higher tax charge partly reflects changes in the tax treatment of investment income. Additionally, other income fell relative to the prior-year quarter, where fair value gains on debt mutual funds had provided a stronger contribution. Profit before tax for Q4 was flat both year-on-year and sequentially.

Consolidated materials consumed in Q4 FY26 were ₹35,169 crore, compared to ₹23,333 crore in Q4 FY25 and ₹29,234 crore in Q3 FY26. The year-on-year increase of 50.5% reflects three overlapping factors: the consolidation of Suzuki Motor Gujarat Private Limited into the listed entity from April 1, 2025, which brought previously inter-company procurement costs onto the consolidated P&L; a product mix shift towards the small car segment following the mid-year GST reduction; and underlying input cost increases across key materials.

The sequential increase of ₹5,935 crore in materials consumed against a revenue increase of ₹2,558 crore over the same period indicates that cost growth outpaced volume growth within the quarter. As a share of quarterly revenue from operations, materials consumed expanded to approximately 67% from around 57% in Q4 FY25. Stock-in-trade purchases of ₹4,945 crore were lower than both the prior year (₹6,164 crore) and the preceding quarter (₹5,852 crore), providing a partial offset.

Employee benefits expense for Q4 was ₹2,248 crore, up 25.2% from ₹1,801 crore in Q4 FY25. The full-year increase in this line was partly influenced by a one-time charge of ₹594 crore recognised in Q3 FY26, arising from the Government of India's notification of four Labour Codes consolidating 29 existing labour laws. The charge comprised a gratuity revision of ₹326 crore and long-term compensated absences of ₹268 crore, both stemming from a revised wage definition.

The company has indicated that Central and State Rules under these codes are yet to be finalised and that additional accounting impacts may be required once further government clarifications are available. The eventual quantum of incremental liability therefore remains uncertain.

Depreciation and amortisation for Q4 was ₹1,748 crore, up 19.6% from ₹1,462 crore in Q4 FY25 and in line with Q3 FY26's ₹1,735 crore. The year-on-year increase reflects the amortisation of capital expenditure of approximately ₹10,122 crore in FY26 and a similar amount in FY25, directed at capacity expansion. The depreciation charge is expected to continue rising as new assets come into service.

Inventories on the consolidated balance sheet grew to ₹11,321 crore at March 31, 2026 from ₹6,913 crore a year earlier. The company noted that dealer inventory stood at approximately 12 days of stock at year end, with around 1.90 lakh pending customer orders, including nearly 1.30 lakh in the small car segment. The inventory build therefore reflects vehicles in production or transit against confirmed orders rather than an accumulation of unsold stock.

An additional cost obligation that has not yet been quantified relates to the Environment Protection (End-of-Life Vehicles) Rules, 2025, which came into effect on April 1, 2025. The rules impose Extended Producer Responsibility obligations on vehicle manufacturers, to be fulfilled through the purchase of EPR certificates. The company has disclosed that the pricing mechanism for these certificates has not been established and that a reliable financial estimate is not currently possible. The impact will be assessed once the implementation framework is in place.

Full year results

For the full year FY2025-26, consolidated revenue from operations was ₹1,83,316 crore, up 19.9% from ₹1,52,913 crore in FY2024-25. The company sold a total of 24.23 lakh vehicles, with domestic sales of 19.75 lakh units and exports of 4.48 lakh units. Exports made Maruti the top passenger vehicle exporter from India for the fifth consecutive year.

Full-year consolidated net profit grew 1.2% to ₹14,680 crore from ₹14,500 crore in FY25. The limited profit growth relative to the revenue increase reflects the same cost dynamics visible in Q4. Materials consumed for the year rose 27.9% to ₹1,11,664 crore, expanding from approximately 57% to 61% of revenue from operations. Employee benefits rose 28.8% to ₹9,050 crore and depreciation rose 20.2% to ₹6,742 crore. Net cash generated from operating activities grew more favourably, rising 18.1% to ₹19,100 crore, reflecting the cash-generative nature of the underlying business.

The Board of Directors recommended a final dividend of ₹140 per share for FY26, up from ₹135 per share in FY25, to be approved at the Annual General Meeting.

The cost pressures visible in FY26 — higher material costs, an uncertain labour code liability, rising depreciation, and the pending EPR obligation — are likely to remain relevant in FY27. The degree to which they weigh on margins will depend on input price trends, the pace of finalisation of Labour Code rules, and whether the current supply constraint, which has supported pricing, persists as new capacity comes onstream. The company's strong cash generation and debt-free balance sheet provide a degree of financial flexibility as it navigates this cost environment.