Good sales, low base push Maruti Suzuki India Q3 net profit up two-fold

Feb 07 2013, 14:53 IST
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Maruti' net sales during the period under review stood at Rs 10,956.95 crore. (Reuters) Maruti' net sales during the period under review stood at Rs 10,956.95 crore. (Reuters)
SummaryMaruti' net sales during the period under review stood at Rs 10,956.95 crore.

Riding on good sales of new models like Ertiga and Swift DZire, and benefiting from low base effect, the country's largest car maker Maruti Suzuki India today reported an over two-fold jump in net profit at Rs 501.29 crore for the third quarter ended December, 2012.

The company's net profit stood at Rs 205.62 crore during the same period last fiscal.

Net sales during the period under review stood at Rs 10,956.95 crore, up 45.57 per cent from Rs 7,527.10 crore in the year-ago period, Maruti Suzuki India (MSI) said in a statement.

"The growth in net profit was primarily due to higher sales and good response to new models like Ertiga and Swift DZire," it said, adding the company's continued cost reduction efforts helped to drive profit in the quarter.

Hit by low sales and labour unrest at its Manesar plant and rupee depreciation, MSI had reported a 63.6 per cent fall in net profit for the quarter ended December 31, 2011, to Rs 205.6 crore, its worst performance in previous 12 quarters.

MSI said its sales volume stood at 3,01,453 units during the third quarter this fiscal as compared to 2,39,528 units in the corresponding period of previous year, up 25.85 per cent.

Cheering the smart earnings numbers, shares of MSI were trading 4.10 per cent up at Rs 1,599.50 crore apiece during afternoon on the BSE.

During the quarter under review, the company sold 2,68,957 units in the domestic market compared to 2,11,803 units, reflecting a growth of 26.98 per cent.

It exported 32,496 units during the quarter, up 17.21 percent from 27,725 units in the year-ago period.

"The growth in net sales was on account of higher volumes, favourable model mix and enhanced export realisation," MSI said.

During the quarter, the company's total expenses went up by 39.86 per cent to Rs 10,667.40 crore from Rs 7,627.32 crore in the year-ago period.

MSI spent Rs 8,376.04 crore on raw materials compared to Rs 5,866.26 crore in the same period last fiscal, up 42.78 per cent, the statement said.

During October-December period last year, MSI's tax expenses also increased by over three-fold to Rs 174.34 crore as against Rs 55.68 crore in the corresponding three-monthly period in 2011.

The finance cost of the firm also went up by over two-fold to Rs 45.93 crore from Rs 17.59 crore in the same period last fiscal, MSI said.

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Commenting on the results, Kotak Securities Auto Analyst Arun Agarwal said: "Maruti Suzuki reported strong Q3 FY'13 numbers. Revenues came in ahead of expectation on account of better than expected average selling price. EBITDA margin at 8 per cent though was in line with our estimates."

Expectation of improvement of passenger car demand, coupled with strong product portfolio, is expected to help the company post healthy volume growth next fiscal, and margins in FY'14 should receive boost from depreciating Yen, he added.

IndiaNivesh Securities Head Research Daljeet S Kohli said MSI's third quarter results were above expectations.

Sales volume increase was led by recovery in the festive demand and low base due to labour issues last year, he added.

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