Maruti Suzuki Q2 nos: Steady performance



Despite headwinds from the demonetisation exercise and the GST transition, Maruti Suzuki showed double-digit volume growth of 13-15 per cent (over the corresponding period a year ago) in each of the last two quarters.

This good run has continued into the September 2017 quarter as well.

Strong volume growth of 17.6 per cent has enabled the company’s topline move up by 21.8 per cent to ₹21,438 crore in the quarter.

Driven by a richer product mix consisting of vehicles such as Ignis, Vitara Brezza, S-Cross and Ciaz, average realisations have inched up by 3.6 per cent to ₹4.35 lakh per vehicle.

The company faced higher raw material costs and increased advertising and promotion spends.

During the quarter, the company took steps to rebrand its retail network across India and created dedicated outlets for each category of its vehicles. Thus, there was pressure on the operating margins.



Operating margins

But lower discounts during the festival season as well as cost saving efforts helped cushion the dent in margins to an extent.

Operating margins for the quarter came in at 16.8 per cent against 17 per cent in the three months ended September 2016.

Although operating profits grew at about the same pace as the revenues, lower other income and higher taxes saw net profit growing by a muted 3.4 per cent to ₹2,484 crore.

With both rural and urban consumption looking up, the company is expected to post healthy volumes.

While the all-new SX4 was launched in May 2017, refreshed versions of the S-Cross and Celerio have been launched this month.

With Suzuki’s Gujarat facility becoming operational, capacity constraints and hence long wait periods for certain models have begun to ease.

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