Last updated: 30 Oct, 2020 | 09:53 am
Signs of recovery: India’s largest car-maker Maruti Suzuki has reported a 1% YoY increase in net profit to ₹1,371 crore, aided by some demand recovery in Q2FY21. Analysts had earlier expected a net profit of about ₹1,520 crore. In Quarter 1, the performance of the Company was significantly affected due to COVID-19 related disruptions and lockdowns. The company had reported its first ever loss since listing in Q1FY21 to the tune of ₹249.50 crore. In Quarter 2, the performance improved on the back of some demand recovery and gradual improvement in supply conditions.
Revenue rises: Maruti Suzuki’s revenue rose 10% on-year to ₹18,744 crore. Analysts had earlier estimated revenue of about ₹19,140 crore. The revenue rose on the back of a rise in domestic car sales. Maruti sold 3.93 lakh units in July-September quarter 2020, registering a 413% growth over the previous quarter and 16.2% over the year-ago period.
Margins improve: Maruti Suzuki’s operating margins improved during the quarter. Ebitda increased 20% on-year to ₹1,933 crore, while EBITDA margin stood at 10.3% as against 9.5% last year. Higher sales volume, lower sales promotion expenses, lower operating expenses and cost reduction efforts supported the operating profit, but increase in commodity prices and adverse foreign exchange movement limited growth.
There are green shoots of recovery in the auto sector. Maruti Suzuki’s dispatches improved in the second quarter, as the economy opened up. Passenger car sales have seen a rapid recovery in September-20, led by India’s largest car manufacturer Maruti Suzuki recording 30.80% on-year rise in total sales to 1.60 lakh vehicles.
Maruti Suzuki is likely to benefit from factors such as a shift to personal mobility amid the pandemic, and rise in demand for entry-level hatchbacks, robust rural demand on strong agri economy. While full-fledged demand recovery could be a few months away, given its market-leader status, Maruti Suzuki is well-poised to tide over the current turbulent phase.