Maruti Suzuki Q3 net up 18% at Rs 802 cr

Revenue rises 14.5% to Rs 12,576 cr on higher volumes, favourable forex

Maruti Suzuki India Ltd (MSIL), the domestic car market leader, missed Street estimates in the October-December quarter; on Tuesday, it announced an 18 per cent year-on-year jump in net profit to Rs 802 crore for the three-month period. The growth came on the back of higher volumes, an internal cost savings programme and favourable foreign exchange rates.

Analysts had expected Rs 890 crore; the earnings were lower largely because of a Rs 70 crore excise duty payout in the quarter. “We were getting a sales tax subsidy on the Gurgaon plant, but that is liable for excise duty after a recent Supreme Court judgement. We made the payout this quarter,” Ajay Seth, chief financial officer said. Net sales were up 15.5 per cent to Rs 12,263 crore. The car maker, which has a 45 per cent share of India’s 2.5 million unit passenger vehicle market, sold 323,000 vehicles.

“Adjusting for the exceptional item related to excise duty and higher ad spend, the adjusted Ebitda margin witnessed marked improvement, both over a year and over a quarter. MSIL is expected to benefit from a multiple earnings growth lever in the next two-three years,” said Arun Agarwal, automobile analyst with Kotak Securities.

	Q3FY15	Q3FY14	% increase
Net Profit (in Rs crore)	802.16	681.15	17.76
Net Sales (in Rs crore)	12,263.14	10,619.68	15.47
(Source: BSE)

In an investor call after the results, Maruti CFO Ajay Seth said that the company will seek shareholder approval on the contract manufacturing agreement (CMA) for the Gujarat factory project within six months. The project faced a lot of opposition from institutional investors after Maruti last year said that it will hand over the mega facility to a wholly-owned subsidiary of its Japanese parent Suzuki Motor Corporation (has a 56.21% stake in Maruti). The company later made some changes in the CMA, saying that while it would market the cars made by Suzuki Motors, Gujarat, it would buy them without any mark-up for profits. The Gujarat plant will start in mid-2017 and at full capacity would produce 15 lakh units a year.

Maruti also added in the call that it is increasing production of Automated Manual Transmissions by 50% to 6,000 units a month from 4,000 under today under its local joint venture with Italian supplier Magneti Marelli. The carmaker had a capital expenditure of Rs 3,500 crore for FY15, and is yet to finalise the budget for FY16.

The Maruti Suzuki scrip at the BSE closed 2.12% up at Rs 3,685.20 on Tuesday.