Maruti: Favourable product mix more important than before

Its Q4 show points to an intense competitive landscape that possibly prevents it from hiking prices

Hamsini Karthik 

While Maruti Suzuki may have beaten the demonetisation blues in terms of its sales volumes, its March quarter (Q4) financial performance points to an intense competitive landscape that is possibly holding it back from fully passing on cost pressure through price hikes. Consider this, even after its revenues grew by 20 per cent in Q4 to Rs 18,005 crore, beating analysts' expectations, Maruti's net profit grew by 15.8 per cent year-on-year to Rs 1,709 crore, lower than Bloomberg estimates of Rs 1,771 crore. It was also the slowest net profit growth in FY17. A large part of the ...

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Maruti: Favourable product mix more important than before

Its Q4 show points to an intense competitive landscape that possibly prevents it from hiking prices

While Maruti Suzuki may have beaten the demonetisation blues in terms of its sales volumes, March quarter (Q4) financial performance point to the intense competitive landscape, which is possibly holding it back from fully passing off cost pressure through price hikes. Consider this, even after its revenues grew by 20 per cent in Q4 to Rs 18,005 crore, beating analysts' expectations, Maruti's net profit grew by 15.8 per cent year-on-year to Rs 1,709 crore, lower than Bloomberg estimates of Rs 1,771 crore. It was also the slowest net profit growth in FY17.A large part of the pressure may be attributed to operating margins or profitability taking a hit in Q4 due to increasing costs of raw materials such as steel, aluminium and rubber and strengthening Japanese Yen against Indian rupee. Therefore, even if Maruti has undertaken cost reduction measures or improved its economies of scale, it didn't help arrest the fall in profitability. While a few analysts believe that the dip in ... While Maruti Suzuki may have beaten the demonetisation blues in terms of its sales volumes, its March quarter (Q4) financial performance points to an intense competitive landscape that is possibly holding it back from fully passing on cost pressure through price hikes. Consider this, even after its revenues grew by 20 per cent in Q4 to Rs 18,005 crore, beating analysts' expectations, Maruti's net profit grew by 15.8 per cent year-on-year to Rs 1,709 crore, lower than Bloomberg estimates of Rs 1,771 crore. It was also the slowest net profit growth in FY17. A large part of the ... image
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