Top Indian carmaker’s profit beats forecast as sales rebound

Maruti Suzuki India reported a higher-than-expected profit in the latest quarter as car sales rebounded and supply-chain issues eased. 

Net income for India’s largest carmaker more than doubled to 23.5bn rupees (about R5bn) for the three months ended December 31, the unit of Japan’s Suzuki Motor Corporation said on Tuesday, beating the average estimate of 18.51bn rupees (about R4bn) forecast by a Bloomberg survey of brokerages.

Revenue also topped estimates, rising 25% to 290.4bn rupees (about R61.5bn). Total costs surged 21% to 269.5bn rupees (about R57bn), according to the company, while raw material expenses rose just 1.7% compared with the same period last year. 

Maruti is revamping its product offerings to claw back market share from rivals Hyundai and Tata. The carmaker, whose core business has long been cheaper, entry-level cars, earlier this month introduced two SUVs as it seeks to catch up in a segment in which it has lagged and cater to the demand of aspirational consumers looking to upgrade from hatchbacks to bigger cars. 

The carmaker has also shifted its stance on electric vehicles. It is planning to roll out its first electric car by 2025, pivoting away from its earlier position that EVs are not the cleanest option to cut emissions in India’s coal-dependent economy. 

Maruti is grappling with climbing raw-material prices that are crimping its margin. To combat those higher input costs, it raised prices by an average 1.1% across models in January, which may hurt consumer demand.

The shortage of electronic components impacted the production of Maruti cars in December, mainly in domestic models, it said. Its output last month declined to 124,722 vehicles from 152,029 a year earlier. 

The carmaker’s shares fell 4.91% in the December quarter, while the benchmark S&P BSE Sensex climbed almost 6%. The stock has gained about 2% this year.

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