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Maruti Q3 preview: Analysts see healthy nos due to recovery in sales volume

India's largest car manufacturer Maruti Suzuki is expected to report healthy numbers when it announces its December quarter results (Q3FY20) later in the day, courtesy recovery in sales volume and benign raw material prices. According to the monthly sales data, Maruti's total dispatches in Q3FY20 came in at 4.4 lakh units, up 2 per cent on a year-on-year (YoY) basis. Average sale price (ASP) for the quarter are expected to improve on account of the wide acceptance of BS-VI variants.

Consequently, analysts see double-digit growth in the company's top-line as well as the bottom-line.

Analysts at ICICI Securities have pegged Maruti's Q3FY20 profit after tax (PAT) at Rs 2,047 crore, up 37.5 per cent YoY. In comparison, the company had reported Rs 1,489.3 crore as PAT in the year-ago quarter.

Further, the brokerage house expects Maruti's total operating income in Q3FY20 at Rs 22,346 crore, up 13.6 per cent YoY, and 31.6 per cent QoQ.

Kotak Securities expects Maruti's Q3FY20 revenue at Rs 22,707.8 crore while profit is seen at Rs 1,746.4 crore, up 17.3 per cent on a YoY basis.

"We expect revenues to increase by 16 per cent yoy in 3QFY20 led by 2 per cent increase in volumes and 9 per cent yoy increase in ASPs due to introduction of new safety regulations for entry-level cars and migration of the petrol portfolio to BS-VI," the brokerage said.

According to the brokerage, Maruti's earnings before interest, tax, depreciation and amortization (EBITDA) is likely to increase by 33 per cent YoY in the quarter, led by an increase in revenues and 150 bps expansion in margin driven by operating leverage benefits, partly offset by higher discounts. The brokerage house sees Maruti's Ebitda at Rs 2,567.3 crore compared to Rs 1,931.1 crore in the year-ago quarter, a 32.9 per cent YoY growth.

According to Reliance Securities, realisation is expected to have grown by 9 per cent due to product-mix and price hikes. Better operating leverage and product-mix would expand margin despite higher discounts.

Meanwhile, Prabhudas Lilladher has retained a strong overweight on Maruti as it is expected to be the first and biggest beneficiary of a demand revival.

At the bourses, Maruti outperformed the benchmark index during the October-December quarter by surging 8.6 per cent as compared to 7.7 per cent gain in the S&P BSE Sensex.


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