BackMaruti’s profit plunges to lowest in 15 quarters
Automaker’s net profit declined 39.3% y-o-y to ₹1,359 crore in Sep quarterFirm records its worst y-o-y decline in sales in the small car segment in the quarter
PremiumMUMBAI : Maruti Suzuki India Ltd posted a 39% year-on-year (y-o-y) drop in net profit to ₹1,359 crore for the September quarter, the lowest profit in 15 quarters.
The decline was, however, softer than the 50-60% drop forecast by analysts. India’s largest carmaker had a year-earlier net profit of ₹2,240 crore.
This could be because of reduced tax expenditure and higher non-operating income. Maruti Suzuki’s total tax expenses in Q2FY20 fell 78% from the year-earlier to ₹213.4 crore.
“This is the result of the corporate tax cuts announced by the finance minister last month wherein Maruti Suzuki has adopted the new tax regime in Q2," said Mitul Shah, auto analyst, Reliance Securities.
Maruti Suzuki’s Q2FY20 revenue fell 25% y-o-y to ₹16,120.4 crore—the lowest in the past 13 quarters—amid subdued demand.
Maruti Suzuki sold a total of 338,317 vehicles in the quarter, a 30% decline from the year earlier. Sales in the domestic market fell 31% to 312,519 units.
The carmaker recorded its worst y-o-y decline in sales in the small car segment in the quarter. Its mini car sales plunged 62% y-o-y while compact sales fell 23%. It sells models such as the new Wagon R, Ignis, Baleno, Swift, Dzire, and Celerio in the compact car segment.
The company said that while mini and compact cars comprised about 67% of its total domestic sales, utility vehicles accounted for almost 18%.
Maruti Suzuki’s market share in the SUV segment was dented by new models from rivals such as Hyundai Motor India Ltd’s Venue and Kia Motors’ Seltos models. To give a renewed push to the sales of its Vitara Brezza, the company plans to soon start selling a BS VI-compliant petrol variant of the compact SUV.
Meanwhile, the company reported an operating EBIT (earnings before interest and taxes) of ₹680.2 crore, down about 40% quarter-on-quarter. The operating EBIT stood at 4.2% of net sales in Q2FY20 as against 6% in Q1FY20.
Net profit margin, however, rose to 8.4% in the September quarter from 7.7% in the previous quarter due to higher fair value gains on invested surplus, cost reduction efforts, and lower advertisement expenses.
“The average discount for Q2FY20 stood at ₹25,761 per vehicle as against ₹18,758 per vehicle in Q2FY19," said Ajay Seth, chief financial officer, Maruti Suzuki. The company plans to roll back the discounts post the festive season.
In the past quarter, the company launched two new cars – small car S-Presso and the six-seater, multi-purpose XL6 at a starting price of ₹3.69 lakh and ₹9.79 lakh, respectively (both ex-showroom Delhi).
Shashank Srivastava, head, sales and marketing, Maruti, said the S-Presso has received more than 16,500 bookings averaging 750-800 bookings per day while the XL6 has been receiving about 6,000 bookings per month so far.
Srivastava said retail sales in October has been at par with that of last year and saw single-digit y-o-y growth during the Navratri and Dussehra period.
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