Maruti Suzuki Q2 Results Preview: Net profit to rise 50%, revenue growth seen at 25% on volumes, rich product mix

Maruti Suzuki Q2 Results Preview: Maruti Suzuki is all set to announce its July-September quarter results for fiscal 2023-24 (Q2FY24) on Friday, October 27. India's largest car manufacturer is expected to report robust earnings on the back of healthy volumes, a rich product mix, and softer commodity costs, according to estimates by analysts and leading brokerage houses.

Maruti Suzuki highlighted in its FY23 annual report that it expects a 6 per cent compound annual growth rate (CAGR) until FY31 for the Indian passenger vehicle (PV) industry. In FY24, the company expects to grow at a slightly higher rate than the market. 

Additionally, management expects demand from the export volumes to grow at 750,000-800,000 units by FY31 - implying a 14-15 per cent CAGR, compared to FY23. This implies a 7-7.5 per cent CAGR in total volumes for the firm until FY23.

Also Read: Maruti Suzuki Q1 Results: Net profit jumps 145% to ₹2,485 crore; revenue rises 22% YoY

Maruti Suzuki Business Updates

-Maruti Suzuki sold a total of 1,81,343 units in September 2023, a 3.9 per cent on-year rise from 1,76,306 units sold in the same period last year. The company's domestic sales stood at 1,58,832 units in September, a 2.5 per cent rise from 1,54,903 units in the corresponding period last year.

-Maruti Suzuki Alto, Maruti Suzuki S-Presso, and Maruti Suzuki Swift were among the top-selling models in the mini and compact-segment cars in September 2023. Both Alto and S-Presso logged total sales of 10,351 units in September 2023, down from 29,574 units sold in the same period last year.

-The company's vehicle exports stood at 22,511 units in September 2023 compared to 21,403 units exported in September 2022. During the April-September 2023 period, Maruti Suzuki sold 10,50,085 units. With this, the carmaker has surpassed the half-yearly sales mark of 1 million units for the first time, according to a regulatory filing by Maruti Suzuki to the stock exchanges.

Also Read: Maruti Suzuki to fully acquire Gujarat car unit in $1.54 bn share-swap deal

Maruti Suzuki Q2 Forecast: Growth estimates by brokerages

-Domestic brokerage house Kotak Institutional Equities estimates that the automaker's net profit will likely rise more than 50 per cent, supported by favourable product mix and timely price hikes undertaken by the company.

-The company's revenue from operations will likely rise by 25 per cent year-on-year, driven by a 7 per cent increase in volumes and an 18 per cent rise in average selling price on a richer product mix - with a higher mix of the SUV segment, according to Kotak Institutional Equities.

-The company's EBITDA margin is expected to rise by 260 basis points (bps) supported by operating leverage benefit, richer product mix, and the one-time negative impact in the preceding April-June quarter on bonus payouts and retiral benefits.

-Domestic brokerage house Motilal Oswal Financial Services had reiterated its ‘buy’ rating on the stock. ‘’We are raising our EPS estimates for FY24/FY25 by 5-6 per cent to reflect the sharp improvement in SUV mix, fueled by new product launch benefits since Jul’23,'' said the brokerage.

-‘’The stock trades at 25.8x/23.7x FY24E/FY25E consolidated EPS. Reiterate BUY with a TP of ₹11,900 (premised on 25x Sep'25E consolidated EPS),'' added Motilal Oswal. Maruti Suzuki's recently launched Jimny and Fronx will help the company expand its presence in the SUV segment, according to the brokerage.

-If the supply situation of the electronic components improves, Maruti Suzuki aims to achieve market leadership in the SUV segment in FY24. In the non-premium hatchback segment, Maruti dominates a 70 per cent market share.