Maruti Suzuki Q2 profit may surge up to 355% YoY on higher sales volume

Maruti Suzuki Q2 preview: The company, which is due to announce its result on Friday, October 28, could also see margin expansion due to price hikes, forex benefits, and operating leverage

India’s biggest domestic car manufacturer, Maruti Suzuki India, will likely report 250-300 per cent year-on-year (YoY) rise in net profit for the September quarter of FY23 (Q2FY23) aided by impressive sales volumes due to easing of supply-chain constraints, and a low channel inventory. 
 

The company, which is due to announce its result on Friday, October 28, could also see margin expansion due to price hikes, forex benefits, and operating leverage.

On the bourses, shares of the company advanced 4.2 per cent during the quarter under review, as against 8.3 per cent rally in the benchmark S&P BSE Sensex. The S&P BSE Auto index, meanwhile, surged 9 per cent. 

Here’s how key brokerages expect from Maruti’s Q2FY23 results:

Motilal Oswal Financial Services

The brokerage pegs net profit at Rs 1,887.4 crore for the quarter, up 297 per cent YoY, from Rs 475.3 crore reported last year (Q2FY22). The Ebitda (earnings before interest, tax, depreciation, and amortization) is seen at Rs 2,692.4 crore, higher than Rs 854.9 crore logged last year. 

Ebitda margin could rise to 9.2 per cent from 4.2 per cent YoY, and 7.2 per cent QoQ. Ebit margin, meanwhile, is seen at 6.9 per cent vs 0.5 per cent YoY, and 4.8 per cent. 

Prabhudas Lilladher

Maruti Suzuki's revenue, the brokerage said, could increase 12 per cent QoQ to Rs 29,740.6 crore, led by 10 per cent increase in volumes, supported by pent-up festive season demand. Revenue last year was Rs 20,538.9 crore, and Rs 26,499.8 crore in Q1FY23.  
 

The brokerage also expects a EBITDA margin expansion of 180bps QoQ, and 450bps YoY to 9 per cent, on the back of easing raw material cost, improved volumes, and price hikes.

Emkay Global

The brokerage said revenue could grow ‘strongly’ YoY due to higher volumes (over 36 per cent), and better realization (around 4 per cent). Revenue from sales is seen at Rs 29,089.9 crore, with volumes at 517,395 units. 

Gross margin, it said, could expand due to better net pricing, and Japanese Yen’s depreciation. Ebitda margin to grow 533 bps YoY, and 228bps QoQ to 9.5 per cent, owing to benign scale.

PAT is pegged at Rs 1,979.7 crore, up 316 per cent YoY and 95.5 per cent QoQ. 

Kotak Institutional Equities

The brokerage expects revenue to rise 12 per cent QoQ (44 per cent YoY) to Rs 29,573.7 crore, led by 11 per cent QoQ (36.3 per cent YoY) increase in volumes, and 1 per cent QoQ increase in ASP (average selling price).
 

The Ebitda margin, it said, could increase by 340bps QoQ to 10.6 per cent, on the back of operating leverage benefit, raw material tailwinds, and benefit of Yen depreciation resulting in lower import costs. This would, however, be partially offset by higher marketing costs.
 

Net profit is pegged at Rs 2,165.1 crore, up 355.5 per cent YoY, and 114 per cent QoQ.