Dolat Capital said Maruti seems to take a hit on margins due to the increase in input cost and not being able to pass the hikes considering the competitive intensity.
Maruti Suzuki India shares crashed nearly 9 percent intraday to break its earlier 52-week low of Rs 6,501.65 touched on October 26, 2018, after sharp dip in third quarter earnings.
The stock hit a fresh 52-week low of Rs 6,420 intraday today. It closed at Rs 6,516.35, the lowest closing level since April 27, 2017, down 7.4 percent on the BSE.
The country's largest car maker said its profit for the third quarter fell 17 percent to Rs 1,489.3 crore YoY, impacted by the adverse commodity prices and forex rates.
Profitability was partly supported by higher other income and lower tax cost.
"Adverse commodity prices & foreign exchange rates, higher marketing & sales expenditure and higher costs in resources and capacities which were earlier planned to enable a higher estimated growth impacted the profitability," Maruti said.
The impact was partially offset by the company’s regular efforts in cost-reduction, VA-VE exercises, suggestions from employees and supplier partners, it added.
Revenue from operations in Q3 grew by 2 percent to Rs 19,668.3 crore in quarter ended December 2018 despite tepid sales volumes, driven by price realisation.
Realisations per vehicle during the quarter increased by 2.6 percent to Rs 4,58,850 in Q3FY19 compared to Rs 4,47,290 in third quarter of last year.
Maruti volumes dipped 0.6 percent YoY (down around 12 percent QoQ) to 4.29 lakh units, with no significant price hike taken along with higher discounts given during the quarter.
Dolat Capital said Maruti seems to take a hit on margins due to the increase in input cost and not being able to pass the hikes considering the competitive intensity.
The research house believes that macro level slowdown is also impacting MSIL growth.
At operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) tanked 36.4 percent year-on-year to Rs 1,931.3 crore and margin contracted sharply to 9.8 percent against 15.8 percent in same period last year.
"Commodity prices had an impact of Rs 300 crore and forex had an adverse impact of 0.7 percent on margin," the management said while addressing conference call.
Other income showed nearly 4-fold increase to Rs 917.3 crore during the quarter against Rs 245 crore in same period last year while tax expenses dropped nearly 26 percent to Rs 571 crore YoY.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
