Maruti Suzuki soars 5%, hits 52-wk high on better-than-expected Q2 results

Shares of Maruti Suzuki India moved higher by 5 per cent to Rs 9,500 on the BSE in Friday’s intra-day trade after the company reported a better-than-expected profit after tax (PAT) of Rs 2,061.5 crore in September quarter (Q2FY23). The profit was aided by better sales, and improved realisation. Analysts expected PAT of around Rs 1,700 crore for the quarter. The automobiles company had PAT of Rs 475 crore in the year-ago quarter.

The stock has surpassed its previous high of Rs 9,450, which it had touched on September 23, 2022. In the past one year, it has outperformed the market by surging 30 per cent, as compared to 0.10 per cent decline in the S&P BSE Sensex.The stock had hit a record high of Rs 10,000 on December 20, 2017.

In Q2FY23, the company registered its highest-ever quarterly net sales at Rs 2,854 crore, up 47.8 per cent year-on-year (YoY), against Rs 1,930 crore in Q2FY22. Operating earnings before interest and tax margin improved 670 bps YoY, and 220 bps sequentially at 7.2 per cent.

The relatively better sales volume led to improved capacity utilization, favorable foreign exchange variation, cost reduction efforts, and improved realisation which supported margin expansion, Maruti Suzuki said.

The company said it has been making simultaneous efforts in securing electronic components availability, cost reduction and improving realization from the market to better its margins.

The operating profit in Q2 of last year had dipped sharply owing to steep commodity price increases and electronic component supply constraints and hence results of Q2FY23 are not strictly comparable with those of Q2FY22, the company said.

Maruti Suzuki Q2 performance was better-than-street estimates. Its new models – New Brezza, New Baleno, and Vitara have been gaining good traction. Pending customer orders stood at about 412,000 vehicles at the end of the quarter, of which 130,000 units for the newly launched models, analysts at Prabhudas Lilladher said.

"The company has addressed white spaces in its portfolio through the launch of Brezza and Grand Vitara. However, higher competition in the SUV space and slow revival in the entry segment still remains a concern. Production levels for the company are almost back to normal levels as the chip issue is largely addressed. However, market share gains remain key for Maruti, due to the competitive intensity in the UV space. Maruti has lost significant market share over the last few years (41 per cent in Sep-22YTD vs 51 per cent in FY19)," the brokerage firm said.