Maruti Suzuki’s Bottomline Zooms Up 195% In Q2FY14

Maruti Suzuki India (MSI) has posted a cheery set of Q2FY14 numbers. The company’s topline has come in at Rs 10212 crore, up 27% from that of Rs 8070 crore in Q2FY13. In the same period, its bottomline surged by 195% to Rs 670 crore.

The total vehicles sold by the company during the quarter 275586 units, a 20% YoY rise. The domestic sales have improved by 15% to 241562 units while the exports soared by 67% to 34024 units on a yearly basis.

The total expenses (excluding finance costs) increased by 18% from Rs 8144 crore to Rs 9646 crore, as employee expenses, other expenses and raw material cost grew by 66%, 57% and 185 respectively. The inventory expenses saw a sharp 189% dip on a YoY basis.

MSI’s EBITDA also rose from Rs 273 crore in Q2FY13 to Rs 1065 crore in Q2FY14, and its EBITDA margin grew by 704 basis points from 3.39% to 10.43% on a YoY basis. The finance cost of the company climbed 14% to Rs 43 crore.

One of the reasons for such a strong set of numbers is that the company’s Manesar plant at Gurgaon saw a month-long lockout during the September 2012 quarter, following violence between workers and the supervisor. This hampered the production and sales volumes, which in turn reduced the net profit of the company. Hence, there has been a considerable improvement in the company’s performance on a yearly basis.

During the quarter, MSI enhanced its Gurgaon plant with a new engine facility and the third assembly facility at Manesar. Hence, the total capacity for vehicle assembly stands at 1.5 million vehicles per annum.

On a YTD basis, the stock of the company has risen by 8% to Rs 1607, with a TTM price-to-earnings ratio of 16x. As per MSI, it has managed to better its profits through cost reduction and a higher localisation strategy. Considering the current growth of the company, one can expect this stock to do well at this juncture.