Maruti Suzuki Q3 Results out: Profit down but still above estimates!

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Maruti’s Net profit beat estimates: Maruti Suzuki has reported a decrease in net profit to Rs 1,011.3 crore, down by 48% YoY. Last quarter the net profit reported was Rs 475.3 crore. On a YoY basis, there has been a 65% drop in net profit as compared to Rs 1,372 crore in the same period last year. Analysts had earlier anticipated a profit of about Rs 913 crore. 

The recent lower net profit is attributed to lower non-operating income on account of mark-to-market impact. The profits are lower despite the cost-cutting measure taken by the company and the increase in prices across models.

Maruti’s Revenue declines: The revenue declined 1% YoY to Rs 23,246 crore. Last year in the December quarter, the revenue reported by India's largest carmaker was Rs 23,458 crore. The analysts have earlier estimated revenue of Rs 23,261 crore. 

EBITDA decrease: Earning Before Interest, Tax, Depreciation, and Amortization dipped by 30% YoY at Rs 1,559 crore in Q3FY22. However, the numbers are higher than the analysts' estimates of Rs 1,394.5 crore. EBITDA margin stood at 6.7% against 9.5%.

Update on sales number: The company sold 13% fewer vehicles in the Oct-Dec 21 period compared to the same period in the last year. The total number of vehicles sold was 4.3 lakh units. Sequentially, the number of units sold has increased. Domestic market sales were down 22% at 3.65 lakh units. The primary reason for the lower sales number YoY is that the production was constrained by a global shortage in the supply of electronic components because of which an estimated 90,000 units could not be produced.

Export number increase: THe company recorded the highest ever exports numbers at 64,995 units in Q3FY22 compared to 28,528 units in Q3FY21. It is also 66% higher than the previous peak exports in any Q3

Margins: PAT margins (percentage of net sales) stood at 4.6% in Q3FY22 as against 8.7% last year and 2.5% in the previous quarter. The lower margins are because of higher commodity prices which have increased its production costs. Even though the company increased the price during the last quarter and bought other cost-saving initiatives, the margins were lower.

Maruti Suzuki Q3 FY22 Review:

While Maruti Suzuki has reported Q3 earnings above estimates, the profits, as well as the revenues, have registered a decline. The ongoing semiconductor shortage continues to impact the auto industry. Even though the number of units sold in the December quarter has increased, the numbers are well below last year's numbers.   Another sign of worry is that the company has already taken measures to increase profits by increasing the prices of all models and taking cost-cutting measures. An increase in exports can be seen as a silver lining in the result and a ray of hope for the coming quarters.

While the challenges in the industry remain due to the shortages, Maruti Suzuki has the necessary firepower to tide over these difficult times, given its leadership position. Maruti Suzuki shares increased by 7.42% and closed at Rs 8,650 on BSE on Tuesday.

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