Maruti Suzuki India Ltd. reported a higher-than-expected quarterly profit as car sales recovered and supply chain disruptions eased. It also got in-principle board approval to add capacity of up to 1 million vehicles annually.
(Bloomberg) — Maruti Suzuki India Ltd. reported a higher-than-expected quarterly profit as car sales recovered and supply chain disruptions eased. It also got in-principle board approval to add capacity of up to 1 million vehicles annually.
Net income rose 42% to 26.2 billion rupees ($321 million) in the three months ended March 31, compared with the year-ago period, the unit of Japan’s Suzuki Motor Corp. said Wednesday. India’s largest carmaker exceeded the average analyst estimate of 25.65 billion rupees, according to data compiled by Bloomberg.
Maruti, which says its current capacity of 1.3 million units is fully utilized, is looking to nearly double its manufacturing. The capacity addition will be funded by internal accruals, the company said in an exchange filing.
Revenue came in at 320.5 billion rupees, missing estimates. Total costs climbed 18% to 295.4 billion rupees, according to the filing, while raw material expenses fell 8% compared with a year earlier. Maruti also announced a record dividend of 90 rupees per share. Its shares closed 0.5% higher after the earnings on Wednesday.
“The company was able to better its operating profit on account of higher sales volume, improved realization from the market, and favorable forex movement,” it said in a filing to exchanges.
Maruti’s capital expenditure for the year to March 2024 is expected to be about 80 billion rupees, Chairman R.C. Bhargava told reporters in a post-earnings call. He added that the demand in small cars segment remained flat while it was much stronger in the SUV segment.
Shigetoshi Torii resigned as the joint managing director after Suzuki Motor withdrew nomination, the Indian carmaker said.
Surging Demand
Maruti’s strong earnings as well as plans to boost capacity reflect a surge in consumer demand as passenger vehicle sales in India topped pre-pandemic levels in the year through March. Vehicle prices have moderated with carmakers efficiently managing supply chains amid an improvement in the availability of electronics parts.
The carmaker is expanding its lineup of sports utility vehicles to regain market share relinquished to Hyundai Motor Co., which tapped the aspirational consumer demand for bigger cars and currently dominates the segment. Maruti’s shift in strategy comes as its bread and butter — low-cost, entry-level cars — has taken a hit. It is also moving into cleaner transport with its first electric SUV set to debut in 2025.
The shortage of electronic components had some impact on the carmaker’s production in the year through March, the company said in a statement earlier this month. It added that some risk lingers on this front as “the supply situation of electronic components continues to be unpredictable.”
Bhargava said Wednesday that he expects the semiconductor chip supply issues to ease off in the next three quarters.
Maruti sold 514,927 vehicles during the quarter, a gain of 5.3% compared with a year ago, according to the filing.
–With assistance from Debjit Chakraborty and Anurag Kotoky.
(Updates to add chairman’s comments in the sixth paragraph. A previous version corrected to say revenue missed estimates.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.