Maruti Suzuki Q1 profit up 27% to Rs 1,975 cr

The country’s largest carmaker Maruti Suzuki India (MSI) in Thursday reported 26.91% per cent increase in standalone net profit to Rs 1,975.3 crore for the first quarter ended June 30, 2018-19, riding on robust sales.

It had posted Rs 1,556.4 crore net profit in the April-June period of last fiscal, 2017-18, MSI said in a regulatory filing.

The company’s sales during the period under review stood at Rs 21,810.7 crore. They were at Rs 19,374.1 crore in the year-ago period. MSI said the two figures were not comparable as revenues from operation were reported net of GST since the implementation of the new tax regime in July 2017.

During the first quarter of the current fiscal, MSI sold 4,90,479 vehicles as against 3,94,571 units in the year-ago period, a growth of 24.3%. Domestic sales were up 25.9% at 4,63,840 units, from 3,68,431 a year ago.

“While the industry grew by 19.9%, we grew by 25.9%,” MSI CFO Ajay Seth told analysts.  He said demand for petrol vehicles also continued to outstrip those of diesel heavily. “For the industry, the demand for petrol vehicles is 62% of the total sales, but for us it is 72%,” he added.

Seth said that during the first quarter, increase in commodity prices, specially that of steel, had an impact. “Since the fourth quarter last fiscal, there has been an uptick in commodity prices. Specially, steel has seen a sizeable increase and some of the impact of it are getting reflected in the first quarter,” Seth said.

When asked if there could be a price hike, he said a decision would be taken by the company’s management at an appropriate time, taking into consideration all the factors, and not just commodity prices.

Seth also pointed out that adverse foreign exchange was a cause of concern and it would be important to note how it pans out in the next three quarters. On royalty payments, he said they stood at 5.5% of the net sales in the first quarter.

Replying to a question on market demand, MSI Senior Executive Director (Marketing and Sales) RS Kalsi said there was buoyancy, especially in the rural markets following good monsoon and increase in MSP of crops by the government. “Although the urban demand is lesser than rural, there are no concerns as yet. Overall, we are looking forward to a great festival season,” Kalsi said.

Although average discount in the first quarter was higher, he said, the company’s popular models — Vitara Brezza, Baleno, new Swift and Dzire —  still continued to have waiting period. The petrol variants of Baleno, Dzire and Swift had waiting period ranging from two to four weeks, he said, adding that diesel variants of these models were readily available. “However, on Vitara Brezza, there is a waiting period of 4 months,” he said while declining to comment on whether the company planned to bring a petrol variant of the model.

MSI said its exports were at 26,639 units during the first quarter as against 26,140 units in the year-ago period, up 1.9%.