Maruti Suzuki reports lower-than-expected net profit of Rs 441 crore in Q1

India’s largest domestic automobile manufacturer Maruti Suzuki India on Wednesday reported a standalone net profit of Rs 440.8 crore for April-June quarter of FY22 (Q1FY22), hit by increased tax expenses and lower sale volumes. The company had posted a net loss of Rs 249.4 crore in the year-ago period.

Sequentially, however, the profit declined 62.19 per cent from Rs 1,166.1-crore profit reported in the March quarter of FY21 as auto sales remained disrupted due to localised lockdown during April and May. 

“The company's operations and financial results for the quarter ended June 30, 2021 have been adversely impacted by the outbreak of Covid-19 pandemic and the consequent lockdown announced by the State Governments due to which the operations were suspended for part of the quarter and gradually resumed with requisite precautions,” the company said in a statement.

Maruti Suzuki sold a total of 353,614 units during the quarter under study. Sales in the domestic market stood at 308,095 units while exports were at 45,519 units. In comparison, during the same period previous year, the company had sold a total of 76,599 units including sales of 67,027 units in domestic market and exports of 9,572 units.

The scrip of the Delhi-based automaker slipped 2.4 per cent to Rs 7,064 apiece in the intra-day deals but eventually closed at Rs 7,150, down 1 per cent, as the bottom line number missed Street estimates.

Analysts, on an average, had expected a standalone net profit anywhere between Rs 787 crore and Rs 987.7 crore. However, the outlier figures on the extreme ends pegged the same at Rs 426 crore and Rs 1,097.4 crore. READ ANALYSTS EXPECTATIONS HERE

Operationally, Maruti Suzuki India reported revenue of Rs 17,770.7 crore during Q1, compared with Rs 4,106.5 crore in the year-ago period, translating into a 332.72 per cent rise. On a quarterly basis, the income tumbled 26 per cent from Rs 24,023.7 crore.

Ebitda (earnings before interest, tax, depreciation, and amortisation), meanwhile, came in at Rs 821 crore, down 58.7 per cent QoQ, from Rs 1,991 crore clocked in Q4FY21. Ebitda loss stood at Rs 863.4 crore in the corresponding quarter of the previous fiscal. 

Consensus estimate for Ebitda was at Rs 1,094 crore with extreme deviations at Rs 860.5 crore and Rs 1,209 crore.

As expected, Ebitda margins contracted 370 basis points sequentially to 4.6 per cent from 8.3 per cent on higher commodity prices and poor operating leverage. Margins were -21 per cent in Q1FY21. 

"The Ebitda came in lower than our expectations on account of higher employee expenses while gross margins fared marginally better than expectations. Employee cost as a per cent of sales was up 224 bps QoQ while RM cost as a percentage of sales was only up by 90 bps QoQ. Thus, as a result of higher-than-expected employee expense, the Ebitda was 17 per cent below expectations, and Ebitda margins were 98bps below expectations," noted Milan Desai, Lead Equity Analyst at Angel Broking.

He, however, opines the company has already announced price hikes, therefore Maruti Suzuki can gain some market share in coming years on account of its launches in SUV space, an area where it is underrepresented. He maintains positive stance on stock.

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