 "Maruti Q2 preview: Focus on SUVs, lower costs to aid margins, say analysts")
Maruti Suzuki Q2FY24 results preview: Steady volume growth, higher average selling price (ASP), and margin expansion is expected to aid India’s biggest car manufacturer, Maruti Suzuki India’s financial performance in the September quarter (Q2) of financial year 2023-24 (FY24).
Analysts note that MSIL has continued its focus on the sports utility vehicle (SUV) segment, which now forms 35 per cent of volumes. This, coupled with the impact of price hikes undertaken during Q1FY24, and easing commodity prices will further boost margins, they said.
Maruti Suzuki India is scheduled to report its Q2FY24 results on Friday, October 27.
At the bottomline level, analysts expect the company’s standalone net profit to rise up to 66 per cent year-on-year, and up to 260-basis point expansion in Ebitda (earnings before interest, tax, depreciation, and amortization) margin.
Meanwhile, on the bourses, shares of Maruti Suzuki India have surged around 25 per cent over the past six months on the BSE, as against 6.2 per cent gain in the benchmark S&P BSE Sensex, and about 24 per cent surge in the S&P BSE Auto index.
Here’s a lowdown of what key brokerages expect:
BOBCapital
MSIL’s domestic volumes grew around 7 per cent YoY/10.8 per cent QoQ to 552,055 units in Q2FY24. Driven by 12 per cent YoY growth in realization per vehicle, the brokerage expects sales to rise 20 per cent YoY/11 per cent QoQ to Rs 35,887.4 crore.
Ebitda is seen increasing 29.6 per cent YoY to Rs 3,587.6 crore and net profit is pegged at Rs 2,568.2 crore (up 24.6 per cent YoY).
The response to launches has been strong, and should help MSIL beat industry volume growth, it said.
Motilal Oswal Financial Services
The brokerage expects MSIL’s PAT to swell 50.5 per cent YoY to Rs 3,101.5 crore from 2,061.5 crore reported in Q2FY23. Sequentially, the profit would increase from Rs 2,485.1 crore clocked in Q1FY24.
It pegs sales at 552,200 units with realization seen at Rs 68,115 per car.
Traction in new model launches and higher discounts for lower-end models aided volume growth in Q2FY24. This, coupled with expected ASP growth of 18 per cent YoY (5 per cent QoQ), due to mix and price hike, should result in revenue growth of 26 per cent YoY to Rs 37,634.9 crore.
Revenue was Rs 29,930.8 crore in Q2FY23 and Rs 32,326.9 crore QoQ.
Ebitda margin, MOFSL added, is likely to expand 180bp YoY to 11.1 per cent, led by benefits of lower raw material costs and operating leverage.
However, initial signs of demand moderation might act as near-term headwinds in the coming quarters, it cautioned.
Kotak Institutional Equities
It expects revenues to increase by 25 per cent YoY to Rs 37,330 crore led by increase in volumes and ASPs due to price increases and richer product mix (higher mix of SUV segment) in Q2FY24.
Operationally, it estimates Ebitda margin to increase by 260 bps QoQ to 11.8 per cent from 9.2 per cent, led by operating leverage benefits, higher mix of SUVs in portfolio, raw material tailwinds, and no negative impact of bonus payouts and retiral benefits as seen in Q1FY24.
It pegs PAT at Rs 3,429.2 crore, up 66.3 per cent YoY from Rs 2,061.5 crore, and 38 per cent QoQ from Rs 2,485.1 crore.
Ebtida could grow 59.3 per cent YoY/47.8 per cent QoQ to Rs 4,409.5 crore from Rs 2,768.9 crore in Q2FY23/Rs 2,983 crore in Q1FY24.
Prabhudas Lilladher
It expects Maruti's revenue to grow 23 per cent YoY due to 6.7 per cent improvement in volumes and higher realisation of over 16 per cent YoY. It projects Ebitda margin to increase to 11.1 per cent, indicating an expansion of 180bps YoY, due to lower input cost and higher operating leverage.
B&K Securities
The brokerage pegs MSIL’s revenue at Rs 35,832.2 crore, up 19.7 per cent YoY; PAT at Rs 3,051.7 crore, up 48 per cent YoY; and Ebitda margin at 10.5 per cent, up 120 bps.