Business Daily from THE HINDU group of publications
Wednesday, Jan 30, 2008
ePaper | Mobile/PDA Version
Business Daily from THE HINDU group of publications Wednesday, Jan 30, 2008 ePaper | Mobile/PDA Version |
|
|
|
|
|
|
|
Corporate
-
Performance Markets - Stocks
BL Research Bureau Healthy volumes during the festival season have translated into strong results for Maruti for the quarter ended December 2007. On a year-on-year basis, net sales were up 27 per cent at Rs 4,674 crore and net profits stood at Rs 467 crore, growing by 24 per cent. Product Mix
At a time when the two-wheeler and commercial vehicle sectors are combating a slowdown (attributable to high interest rates), the company’s competitive offerings in the A2 (compact) segment (Alto, Wagon R, Swift, Estilo) and improved product mix in the A3 (mid-size) segment (SX4, Baleno, Esteem) have fuelled growth. But, as in the previous quarter, a combination of high promotion and marketing expenses (read discounts), lower initial margins on new, high-value launches like the Swift diesel and SX4 and higher import content for the Swift diesel has led to subdued margins in the current quarter as well. Operating margins have steadily declined from 20.3 per cent in the June quarter to 17.3 per cent in September to 16.7 per cent in the latest quarter. However, a moderation in raw material costs as a percentage of sales from 75 per cent in Q2 to around 68 per cent in the current quarter has partly held back the margin from dipping any further. Export earningsHigher depreciation and interest costs due to ongoing capacity expansion have pulled down net profit margins as well. From 12.7 per cent in Q1, it has dropped to just below 10 per cent in Q3. Though concerns about the launch of the Nano have impacted the stock performance, these concerns may be overdone, as the only model that might be affected is the M800. But the M800 itself contributes to less than 10 per cent of the revenues. Besides, Maruti’s strategy to slowly move into the mid-size, SUV and later the premium segment, will ensure a sustainable product mix. The launch of the A Star will also give a fillip to its export earnings, which have already been looking up in the last few quarters. Also, planned launches like the Swift sedan and Splash will ensure volume driven growth in the medium-term. More Stories on : Performance | Stocks | Maruti Udyog Ltd
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | The Hindu ePaper | Business Line | Business Line ePaper | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2008, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|