Maruti Suzuki Q3 Profit Rises 13% to Rs 3,525 Crore

Introduction

Maruti Suzuki India, the country's largest passenger vehicle manufacturer, announced a steady performance for the third quarter of the fiscal year. The company reported a 13% year-on-year (YoY) growth in its standalone net profit, which reached Rs 3,525 crore. Revenue from operations for the quarter saw a significant 16% YoY increase, amounting to Rs 33,309 crore. Despite the strong growth figures, the net profit slightly missed market expectations, which had projected a figure closer to Rs 3,624 crore. The results reflect a period of robust sales volumes, particularly in the export market, balanced by some margin pressures.

Detailed Financial Performance

The company's financial results for the quarter were primarily driven by an uptick in vehicle sales and an improved product mix favouring higher-value models. Total revenue for the quarter stood at Rs 38,492.1 crore, marking a 15.6% increase compared to the same period last year. Operating profit, or EBITDA, was recorded at Rs 4,470.3 crore, a 14.4% YoY rise, which was largely in line with market forecasts. The net profit after tax (PAT) of Rs 3,525 crore translated to a profit margin of 9.2%. This performance was supported by higher sales volumes, strong demand for SUVs, and lower raw material costs, which helped cushion the impact of other operational expenses.

Sales Volume and Market Reach

Maruti Suzuki's sales performance was a key highlight of the quarter. The company sold a total of 5,66,213 vehicles, representing a 13% increase from the previous year. Domestic sales accounted for 4,66,993 units, growing by 8.7% YoY. The export segment, however, was the standout performer. Export sales surged by an impressive 38.2% YoY to 99,220 units, underscoring the company's strengthening position in international markets. The company maintained a lean inventory, ending the quarter with just nine days of stock. Retail sales during the period were approximately 5,73,000 units, indicating healthy consumer demand.

Key Financial Metrics for Q3

To provide a clear overview of the quarterly performance, the following table summarizes the key financial and operational data.

Analysis of Profit Margins and Expenses

While the top-line growth was strong, Maruti Suzuki's operating margins faced some headwinds. The EBITDA margin saw a slight drop to 12.4%. This was attributed to several factors, including a 20 basis point (bps) increase in sales promotions due to seasonality and higher discounts. Advertising expenses also rose by 40 bps, driven by promotional activities for new models like the All-New Dzire and the upcoming e-Vitara. Furthermore, an unfavorable yen-to-rupee exchange rate added a 20 bps pressure on margins. Depreciation costs also increased, linked to the capitalization of new facilities at the Kharkhoda plant.

Strong Performance in Export Markets

Exports were a significant contributor to Maruti Suzuki's growth this quarter. The company now holds a dominant 49% share of India's total passenger vehicle exports. Export revenue for the quarter amounted to Rs 6,500 crore. The management highlighted continued strong demand from key international markets, including Latin America, Africa, the Middle East, and the ASEAN region. The company plans to further bolster its export portfolio with the introduction of new models like the Fronx and Jimny to international markets, which is expected to sustain this growth momentum.

Domestic Demand Trends and Outlook

On the domestic front, the company observed a gradual shift in consumer preferences. Rural demand is increasingly moving towards premium products, mirroring a trend previously established in urban centers. The entry-level hatchback segment continues to see a decline, while the mid-hatchback segment remains stable and the premium hatchback category is growing. The overall demand outlook for the industry remains uncertain, with more clarity expected in the coming months. The company also implemented a price hike, which is anticipated to have a 30 bps positive impact on net sales going forward.

Strategic Initiatives and Future Direction

Looking ahead, Maruti Suzuki is making a significant push into the electric vehicle (EV) space. The company recently unveiled its first electric SUV, the e-Vitara, at the Bharat Mobility Global Expo 2025. This model will be manufactured in India and exported to approximately 100 countries. The company has set an ambitious goal to become India's largest EV manufacturer within its first year of production. Alongside its EV ambitions, Maruti Suzuki continues to focus on strengthening its portfolio of traditional internal combustion engine (ICE) models to cater to a diverse customer base.

Market Reaction and Conclusion

Following the announcement of the Q3 results, Maruti Suzuki's stock experienced a modest decline of around 1.5%. This reaction was likely influenced by the net profit figure falling slightly below analyst expectations. In summary, the quarter was characterized by robust revenue and sales volume growth, particularly driven by a stellar export performance and a favorable model mix. However, margin pressures from promotional activities and currency fluctuations remain a key area to monitor. The company's strategic focus on expanding its SUV and EV lineup, coupled with its strong export strategy, positions it to navigate the evolving automotive landscape.