Stock Fundamentals

Maruti Suzuki: On fourth gear

Parvatha Vardhini C | Updated on January 16, 2018


Robust volume growth of 18.4 per cent and price increases helped Maruti Suzuki clock 29.4 per growth year-on-year in net sales to ₹17,594.6 crore in the quarter ended September 2016. Strong demand for the Ciaz, Vitara Brezza and Baleno helped. The company also took a price increase of ₹10,000-20,000 on Baleno and the Brezza and hikes of ₹1,500-5,000 on other select models in August this year. Average realisation per vehicle improved by 9.3 per cent, aiding the operating margin.

Hence, despite adverse foreign exchange movement, operating margin expanded to 17.3 per cent vis-à-vis 16.5 per cent in the year-ago period. Lower discounts helped too. A 50 per cent increase in taxes more than offset by lower depreciation and 71 per cent jump in other income. These factors helped net profit growth zoom by 60.1 per cent to ₹2,398 crore.

Raw material benefits may dwindle in the quarters to come. But the company’s richer product mix should support margins.

Published on October 30, 2016

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