For 3QFY2009, Maruti recorded 5.8% decline in net sales to Rs4,625 crore (including service income), which was slightly above our expectation of Rs4,292 crore.
The performance came on the back of 5.8% y-o-y decline in volumes and average realization per vehicle moving up 10.8% y-o-y, which was primarily due to the change in sales mix and better performance by higher realisation segments like A3 and MUVs.
Maruti witnessed a substantial 826bp y-o-y fall in EBITDA margins owing to high raw material cost, which spiked 2.4% y-o-y and accounted for over 79.2% (75.1%) of net sales.
Other expenditure also increased mainly on account of a rise in royalty by 93bp y-o-y to 3.5% (2.6%). The prevailing high fuel prices also led to an increase in Other Expenditure.
The number of employees increased to 7,755 (6,903) in the R&D Department and the new engine shop at the Manesar plant, leading to staff costs increasing 14.1% y-o-y to Rs110.4 crore in 3QFY2009.
Overall, the company reported 57.5% y-o-y decline in operating profits. Bottomline however, declined 54.3% y-o-y to Rs213.6cr and came in line with our expectation of Rs214 crore.
Depreciation increased sharply by 104.7% y-o-y to Rs177.5cr mainly because of change in Depreciation Policy. Other income for 3QFY2009 included one time interest on tax refunds amounting to Rs56.9 crore.
We continue to maintain BUY rating on the stock with a target price of Rs627.