Maruti Suzuki, India’s top car maker, reported a three-fold year-on-year jump in net profit for the second quarter this fiscal, as a heavy production loss during a month-long lockout at its Manesar, Haryana, plant last year depressed the comparable quarter numbers.
Still, the net profit at Rs670.23 crore for July-September 2013 convincingly beat the Street as analysts had expected the figure to be Rs548 crore.
The company said it benefited from the cost reduction measures and higher export utilisations.
The more than 5% gain by rupee against the Japanese yen in the 12 months ended September also helped as it made components imported from Japan cheaper.
The company sold 275,586 vehicles in Q2, registering a growth of 19.6% year on year, while exports rose 66.6%.
Net sales rose 26% during the reporting quarter at Rs10,211.83 crore, the company said.
“Higher localisation and cost reduction initiatives also contributed significantly to bottomline growth during Q2. The overall impact of foreign exchange was positive during the quarter,” the company said.
Most auto companies are now looking at leveraging export opportunity on account of low domestic demand and volatility of India currency.
Ebitda margins stood at 12.9% for Q2 as compared to 8.3% for the corresponding quarter last year.
“We expect Maruti Suzuki to maintain strong Ebitda margins of 11-12% over the next few quarters with the increased discounts being offset by stable currency. We reiterate that the company is the best play on the recovery in the macroeconomic situation and expect a rebound in volumes in fiscal 2015,” said Surjit Singh Arora, analyst with Prabhudas Lilladher.
Ahead, the ongoing festive season and normal monsoon are expected to boost volumes further.
Companies including Maruti Suzuki and Hero MotoCorp which have a significant rural presence posted a robust growth in wholesale despatches in September.
Maruti’s rural market share currently stands at 28% as compared with 25% a year ago. It had earlier mentioned that the volume growth is expected accelerate in the second half on account of good monsoon.