Maruti Suzuki stock down sharply on poor Q2 results

Maruti Suzuki shares fell 6% after the automaker posted 17.4% fall in its profitablility for the September quarter due to sharp disounts and a sales slowdown.

The shares were being traded at Rs 10,861.80 at 2:10 PM on the NSE.

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.

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.

To revive demand, Maruti Suzuki had launched a special price of Rs 4.99 lakh for its entry-level hatchbacks -- the Alto K10, Celerio, and the S-Presso.

The Dream Series models were based on the VXi variant of the Alto K10 and S-Presso, and LXi for the Celerio.

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.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.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.

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.