Rising input costs dent Maruti's Q1 net 7%

Q1 net profit stood at Rs 465.8 crore against Rs 499.6 crore in Q1 of the last financial year, which was below analysts' expectations. Revenue growth at 21 per cent over the same period previous quarter to Rs 4,753.5 crore, however, was in line with the forecasts.

In terms of volumes, domestic sales and exports beat the industry average, growing 13.5 per cent, with the SX4 registering the highest growth.

Maruti, in which Japanese auto giant Suzuki owns 54 per cent, raised prices of various models Rs 10,000 to Rs 15,000, but that was not enough to absorb rising raw material costs, mainly of steel and aluminium, which jumped 10 to 15 per cent this quarter.

As a result, margins have been squeezed and analysts said the only way out will be another round of price increases, which is well on its way. Q1 operating profit margin stood at16.67 per cent against 20.30 per cent in last year's first quarter.

Religare Securities' Piyush Parag reckons that rising costs of steel and aluminium have dented Maruti's operating margins about 1 per cent.

Higher write-off also contributed to the drop in net profit with depreciation costs more than doubling to Rs 166 crore against Rs 82 crore in the same quarter last year.

The company also reported a net loss of Rs 13.90 crore from derivative instruments.

Experts predict that an expected slowdown in car sales on account of higher retail lending rates could pressure the company's profit margins in the coming quarters.