Maruti Suzuki Q2 earnings disappointing
Shares of Maruti Suzuki India (MSIL) slipped 2% to trade below Rs 7,000 Friday, after the car maker reported flat growth in the consolidated net profit during the fiscal second quarter to September 30.
India’s largest passenger vehicle manufacturer reported one percent year-on-year growth in Q2 FY21 standalone profit on October 29. However, a 16% volume growth pushed revenue by 10% higher on a year-on-year basis (YoY). Slide in margins and selling price seems to be emerging as a big concern.
Revenue during the quarter jumped 10.4% to Rs 18,744.5 crore compared to the year-ago period. The domestic sales grew 19% while exports fell 13%. As domestic sales make up 94% of the total sales, the company managed to record a 16% growth in total sales. During the quarter, net sales grew 9.7% to Rs 17,689 crore as compared to the same period previous year. However, the sharp increase in sale could be pent-up demand
Standalone profit increased to Rs 1,371.6 crore in the quarter ended September 2020, against Rs 1,358.6 crore in the same period last year. In Q1 FY21, the company had posted a loss of Rs 249.4 crore.
MSIL reported EBITDA lower than what the street had estimated owing to lower average selling price. Gross profit per vehicle came in at Rs 1.43 lakh in the second quarter of the fiscal versus Rs 1.44 lakh per vehicle in the previous year.
It has seen its average selling price take a hit over the years. According to the company management, the lack of diesel cars has impacted ASPs. Diesel cars usually command a better ASP when compared to petrol cars.
After 16% on-year volume decline in financial year 2020, MSIL is expected to see fall in volume by 13% on-year this fiscal year due to a weak demand scenario amid the pandemic.
MSIL is likely to continue to gain market share driven by its unchallenged franchise. However, margins are expected to remain range-bound as earnings are likely to be largely driven by volume growth than improvement in average selling price ASP/margins.
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