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Maruti Q4: Net profit drops 9.7% on higher commodity cost, fall in other income

Maruti Suzuki had posted a net profit of Rs1,291.7 crore in the year-ago period, with sales taking a hit due to economic slowdown and transition to new safety and emission norms. (Photo: Mint)Premium
Maruti Suzuki had posted a net profit of Rs1,291.7 crore in the year-ago period, with sales taking a hit due to economic slowdown and transition to new safety and emission norms. (Photo: Mint)

  • Net sales for the March quarter rose 32% YoY to Rs24,024 crore on the back of a 27.8% jump in vehicle sales to 492,235 units. Sequentially, vehicle sales fell a 0.7%

NEW DELHI: Maruti Suzuki India Ltd, the country’s largest car maker, reported a 9.4% year-on-year fall in its net profit to Rs1,166.1 crore for the March ended quarter, largely a result of the rise in its overall expenses due to an increase in prices of commodities such as steel, copper, among others. Other income also fell a whopping 89.8% due to mark-to-market losses on certain investments, hitting the bottomline.

The company had posted a net profit of Rs1,291.7 crore in the year-ago period, with sales taking a hit due to economic slowdown and transition to new safety and emission norms.

As such, the New Delhi based car maker has managed to engineer a sharp turnaround in its fortunes from the June quarter when it had reported a loss of Rs249.9 crore, its first ever in two decades, due to the adverse impact of lockdowns to contain Covid-19 pandemic.

Net sales for the March quarter rose 32% year-on-year to Rs24,024 crore on the back of a 27.8% jump in vehicle sales to 492,235 units. Sequentially, vehicle sales fell a marginal 0.7%.

Despite higher expenses during the quarter, operating profit or earnings before interest, tax, depreciation and amortisation (EBITDA) rose 28.8% to Rs1,991.4 crore. Operating margins though contracted 20 basis points to 8.3% from 8.5% in the corresponding period as a result of a sharp 45.13% increase in raw material cost, and 11% rise in other expenses.

"Consequent PAT for the quarter stood at Rs1,166 crore, down 9.7% YoY (I-direct estimate: | 1,560 crore). Sharply lower than expected other income led to below estimate PAT performance, despite tax rate coming in unusually low at 10.8%. Lower other income for the quarter was on account of MTM loss on invested surplus. PAT for the year was down 25% YoY at | 4,230 crore," said analysts of ICICI securities.

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