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Maruti Q4: Net profit, revenue to see robust growth on low base, volume recovery

Maruti Suzuki had reported a 27.7% year-on-year decline in its net profit to Rs1,322.20 crore in Jan-Mar 2020. (Photo: Mint)Premium
Maruti Suzuki had reported a 27.7% year-on-year decline in its net profit to Rs1,322.20 crore in Jan-Mar 2020. (Photo: Mint)

  • If earnings come in line with analysts' estimates, then the car maker would have engineered a significant turnaround in its fortunes from the June quarter when it had reported a loss of 249.9 crore - its first ever in two decades

NEW DELHI: Maruti Suzuki India Ltd, the country’s largest car maker, is expected to post double-digit growth in net profit and revenue for the quarter ended March, aided by the low base in the year-ago period and a gradual recovery in vehicle sales on the back of increasing preference for personal mobility amid the coronavirus pandemic.

According to brokerage firm ICICI Securities, New Delhi-based Maruti Suzuki likely to report a 15% year-on-year increase in its net profit to 1,500 led by a 26.6% jump in net sales. The company’s vehicle sales during the quarter is likely have risen 27%.

The company will announce its March quarter results later today.

Analysts' estimates compiled by Bloomberg suggest that Maruti is expected to report a net profit of Rs1,699.3 crore (17 analysts) while revenue from operations is seen at Rs23,918.90 crore (18 analysts).

The company had reported a 27.7% year-on-year decline in its net profit to Rs1,322.20 crore in the year-ago quarter as sales took a hit due to economic slowdown and transition to new safety and emission norms.

“We expect gross margin decline of 353bps Y-o-Y and EBITDA improvement of 32.4% at Rs20.5bn, up 39bps, as employee expenses marginally fell 38bps Y-o-Y while other expenses dropped 354bps YoY," said analysts of ICICI Securities in a note.

If earnings come in line with estimates, then the car maker would have engineered a significant turnaround in its fortunes from the June quarter when it had reported a loss of 249.9 crore, its first ever in two decades, as sales slumped because of lockdowns to contain the spread of the pandemic.

Vehicle manufacturers like Maruti had to close their factories and showrooms in March last year, following the lockdown announced by the union and state governments.

After a devastating first half in FY21, Maruti witnessed a sharp recovery in production and sales in the second half as sales of its compact cars picked up as preferred personal mobility to avoid contracting infection and a quicker recovery in economic activity. Some of Maruti’s popular products like, Baleno and Swift, have high waiting period and most of the company’s dealers also have less than 20 days of stock with them.

High commodity costs, shortage of components like semi-conductors and massive surge in covid cases across the country can, however, play spoilsport in the coming months.

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