Leading carmaker Maruti Udyog Ltd posted a better-than-expected 66 percent jump in quarterly net profit as cost savings and strong sales of pricier models outweighed high raw material prices.
MUMBAI: Leading carmaker Maruti Udyog Ltd posted a better-than-expected 66 percent jump in quarterly net profit as cost savings and strong sales of pricier models outweighed high raw material prices.
The result boosted its stock more than 3 percent to a six-week high of Rs 790 in a firm Mumbai market.
The passenger vehicle market in Asia's third-biggest economy is forecast to nearly double to 2 million units by 2010, boosted by rising incomes, affordable loans and product launches.
But margins are under pressure as manufacturers have to pay more for raw materials, from steel to rubber, and firmer interest rates and higher fuel prices could slow demand.
New Delhi-based Maruti, 54.2 percent-owned by Japan's Suzuki Motor Corp, said net profit rose to Rs 3.7 billion in the fiscal first quarter to June from Rs 2.23 billion a year earlier.
Its net sales rose 24 percent to 32.69 billion from 26.27 billion a year earlier.
The median forecast in a Reuters poll was for net profit of 3.09 billion on revenues of 30.90 billion.
Full-year net profit is forecast to rise by more than a fifth to 14.6 billion rupees, according to Reuters Estimates.
Maruti shares, valued at more than $4.5 billion, fell 8 percent in April-June, compared with an 11 percent drop on the auto sector sub-index and a 6 percent decline on the benchmark stock index.
Vehicle sales at Maruti, which controls more than half the domestic passenger vehicle market with its popular Zen and Alto models and Swift hatchback, rose 19 percent to 144,948 units in April-June from a year earlier.
A tax cut earlier this year on small cars -- which make up three-quarters of the passenger car market -- has boosted sales at Maruti and rivals Hyundai Motor Co and Tata Motors Ltd.
Suzuki said earlier this month it would build a new compact car in India for Nissan Motor Co to sell in Europe.
Nissan is also planning to assign production of a car to one of Suzuki's factories in India.
Maruti is building a second car plant, with a targeted capacity of 250,000 units, due to start operations by the year-end. It will also launch a diesel car this year and a new model for European markets in 2008-09.
Hyundai is building a second Indian plant, taking its capacity to 600,000 units by 2007, while a joint venture between Tata Motors and Italy's Fiat will build cars, engines and transmissions in India.
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