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India’s largest carmaker Maruti Suzuki is all set to announce third quarterly financial result for ending December 31, 2023 on January 30.  Analysts from various brokerages anticipate that the company is likely to experience a decline in margins on a sequential basis due to an unfavorable product mix and increased discounts offered during the December quarter.

According to estimates by brokerage firms, the four-wheeler manufacturer is anticipated to witness a 21 percent year-on-year growth in profit, reaching 2,838 crore for the October to December quarter.

Also read: Bajaj Holdings Q3 results: Net profit rises 28% to 1,644 crore

“We expect revenues to increase by 14% YoY, led by an 8% YoY increase in volumes and a 6% YoY increase in ASPs due to price increases and richer product mix (higher mix of SUV segment) in 3QFY24,” said brokerage firm Kotak Institutional Equities.

The firm further projects that EBITDA margins are likely to decline by 150 bps QoQ to 11.5%. “ We estimate EBITDA margins to decline by 150 bps QoQ to 11.5%, led by negative operating leverage benefit, higher discounts on account of the festive season, reversal of finished goods inventory and inferior product mix (200 bps decline in SUV segment mix) in 3QFY24,” it said further.

Also read: L&T Q3 results: Net profit jumps 15% YoY to 2,947 crore; revenue rises 19%

Maruti Suzuki reported a robust 80% surge in its net profit, amounting to 3,716 crore in the previous quarter ending in September. Concurrently, the company witnessed a substantial 24% growth in revenues, reaching 37,062 crore.

“Volume growth of 8% YoY was driven by visible traction in UVs (60% YoY growth), while entry-level models declined 48% YoY. EBITDA margin likely to contract 70bp QoQ to 12.2%, due to an uptick in RM costs coupled with operating deleverage. We have slightly tweaked our FY24E/FY25E volumes to account for the weakness in the entry-level segment,” said brokerage firm Motilal Oswal.

Also read: Dr Reddy’s Laboratories Q3 Results: Net profit rises 10.6% to 1,379 crore; 5 key highlights

According to analysts at Nuvama Institutional Equities, there is a projected 13 percent year-on-year growth in the company’s passenger vehicle segment. In contrast, Mahindra and Mahindra have demonstrated exceptional performance by surpassing industry standards, achieving a remarkable 26 percent year-on-year growth in passenger vehicle revenue for MM’s auto division. A report also highlighted the positive impact of the Japanese Yen’s depreciation against the INR on the company’s prospects.

“Revenue growth YoY to be supported by better volume/realization. EBITDA margin to expand on better net pricing. Watch out for demand outlook, particularly for rural/entry-level segments,” the firm said.

 

 

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Published: 30 Jan 2024, 09:34 PM IST

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