Maruti Suzuki beats estimates with 23% rise in Q1 net profit

NEW DELHI: The country’s largest carmaker Maruti Suzuki has beaten street estimates to report a 23 per cent year-on-year increase in its net profit at Rs 1,486 crore for the quarter ended June, helped by higher sales and lower material expenses that offset impact of unfavourable foreign exchange rates.

A Bloomberg poll of 29 analysts had estimated Maruti’s first quarter net profit at Rs 1,224 crore while Thomas Reuters forecasted net profit of Rs 1,239 crore.

Maruti Suzuki had posted net profit of Rs 1,208 crore in the first quarter of the last fiscal. The increase was aided by "higher turnover, material cost reduction, higher non-operating income and lower depreciation," the company said, adding that adverse foreign exchange movement reduced profit to some extent.

The yen appreciated by about 11 per cent in the April-June quarter, increasing Maruti Suzuki’s expenses on imports.


Net sales for the first quarter grew 12.1 per cent to Rs 14,654 crore as compared to Rs 13,078 crore in the year-ago period.

Abhishek Gaoshinde, research analyst at Reliance Securities, said, "While operating performance was in line with expectation, the bottom line was above estimate on back of higher than expected other income."

Shares of Maruti Suzuki closed at Rs 4,485.25 on the Bombay Stock Exchange on Tuesday, down by 1.44 per cent from the previous close. The Sensex fell by 0.42 per cent to close at 27,976.52.

Maruti Suzuki sold 348,443 vehicles in the first quarter 2.1 per cent more than a year earlier. While domestic sales grew by 5.4 per cent to 322,340 units, exports stood at 26,103 units. Sales volume were affected by a 10 per cent drop in June on account of disruption in supplies due to fire at vendor Subros, the company said.

"Growth in the first two months of the quarter had been 10.2 per cent but the unfortunate incident of fire at a key vendor of the Company resulted in lower sales in June 2016," it said.

The company hopes to recover the lost volumes during the course of the year.

Mahantesh Sabarad, deputy head of research at SBICAP Securities, said, "Going ahead, financial performance of the company should be better. In the first quarter, volumes were affected due to the shutdown. They should make up for it in the rest of the year."

Other income more than doubled to Rs 483.3 crore due to a change in accounting norms that came into effect from April 1. Mutual fund investments are now accounted for on fair value and not cost basis.

Financial results for the quarter have been prepared in compliance with Ind-AS accounting standards, and for a liketo-like comparison, the results for the fiscal first quarter of last year have been restated, the company said.