Maruti Suzuki’s Profits Jump 80% in Q4FY13

In its Q4FY13 results, the country’s largest car maker Maruti Suzuki has displayed a fabulous performance and beaten street estimates. The share prices of Maruti Suzuki (MSIL) closed the day higher by 5.26% at Rs 1673.45 per share. The stock hit a 52-week high today, touching a price of Rs 1690.40 per share. An important consideration in the company’s performance for this quarter was its merger with Suzuki Powertrain India (SPIL).

In the period under review, MSIL sold 343709 vehicles as against 360334 in Q4FY12. Its sales volumes have been lower by 4.61% YoY. However, the net sales (excluding the merger) stood at Rs 12566.7 crore, higher by 9.4%, on a yearly basis. Excluding the merger, its net profit was higher by 79.8% at Rs 1147.5 crore.

Including the merger, MSIL’s revenues grew by 13.45% to Rs 13304.01 crore, EBITDA by 132.92% to Rs 1999.61 crore and its net profits by 93.74% to Rs 1293.62 crore. The company’s profitability increased because of higher sales of newer models like Ertiga, Dzire and Swift, cost reduction, localisation efforts and favourable exchange rates.

During FY13, MSIL’s sales volumes rose by 3.33% to 1171434 units. Its consolidated results were also robust. Revenues increased by 22.76% to Rs 44304.25 crore. With this, its EBITDA and net profit grew by 71.39% and 49.89% respectively. This shows significant improvement in the margins of MSIL. During the year, it improved its EBITDA margin by 277 basis points to 9.77% and its net profit margin by 100 basis points to 5.53%.

Overall, MSIL’s numbers were boosted by the merger and by higher Other Income.

The sales volumes in the automobile industry have been under tremendous pressure lately. High interest rates, soaring fuel prices and weak consumer sentiment have been responsible for a drastic decline in sales volumes across segments. While sales have been under pressure, MSIL has managed to maintain a relatively strong position due to the launch of new and successful models like Ertiga and Dzire. Its diesel sales too have been adding to support in sales volumes.

Although these short-term pressure continue to exist, we have been bullish on the prospects of MSIL because of its product offerings and expansion plans. We maintain this positive outlook as any improvement in the industry dynamics will lead to better performance by the company.