Maruti Suzuki Q4 preview: New launches, easing raw material costs to boost margin

Automaker Maruti Suzuki is expected to report a decent set of numbers for the March quarter of the financial year 2022-23 (Q4FY23), supported by new launches, easing raw material costs and healthy demand during festivals.

Maruti's stock performance was subdued in the March quarter of FY23; it was down over a per cent. Maruti shares hit their 52-week low of ₹7,062.65 on May 13, 2022, and their 52-week high of ₹9,768.65 on October 31, 2022, on BSE.

Upbeat quarterly numbers and management commentary will work as a positive trigger for the stock which is about 15 per cent down from its one-year peak.

Brokerage firm Motilal Oswal Financial Services expects a 5.4 per cent year-on-year (YoY) rise in Maruti's volume for the March quarter of the last financial year, aided by the easing of supply chain constraints, traction for new model launches and healthy demand during festivals.

Motilal expects a 24 per cent YoY rise in Maruti's net operating revenue for Q4FY23 to the tune of ₹33,168.2 crore.

As per the brokerage firm, adjusted PAT for the quarter under review may come at ₹2,836.5 crore, up 54.2 per cent YoY.

Motilal expects Maruti's EBITDA at ₹3,609.7 crore, up 48.7 per cent YoY, while the EBITDA margin is likely to expand to 10.9 per cent from 9.1 per cent YoY, led by benefits of lower raw material costs and operating leverage.

Motilal, however, believes initial signs of demand moderation and an increase in supply challenges of late can act as near-term headwinds for the coming quarters.

As per the estimates of another brokerage firm Kotak Institutional Equities, Maruti Suzuki's net sales may rise 21.1 per cent YoY to ₹32,377.6 crore due to price increases and a richer product mix, especially in March.

Kotak believes Maruti's adjusted PAT may rise 53.9 per cent YoY to ₹2,830.5 crore for the quarter. Maruti's EBITDA for the quarter may rise 43.8 per cent YoY to ₹3,490.8 crore while EBITDA margin may rise 170 bps YoY to 10.8 per cent.

"We estimate EBITDA margin to increase led by operating leverage benefits and favourable product mix, partly offset by higher advertisement spends on account of newer launches," said Kotak.

Emkay Global Financial Services expects Maruti to post a 22 per cent YoY rise in net sales at ₹32,613.7 crore while the brokerage firm expects a 40.1 per cent YoY jump in EBITDA and 135 bps YoY rise in EBITDA margin.

"Revenue to grow YoY due to higher volumes (up 5 per cent) and realisation (up 16 per cent). EBITDA margin to expand YoY owing to the benign scale and price hike. On a quarter-on-quarter basis, the EBITDA margin may improve, led by price hikes, lower discounts and batter scale, despite the JPY appreciation," said Emkay.

Disclaimer: The views and recommendations given in this article are those of the brokerage firms. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.