Maruti Suzuki India Ltd left no stones unturned when it reported results for the quarter ended September. When the stock broke out and started hitting fresh record highs many questioned the sudden up move and will it be able to hold onto premium valuations.
But, September quarter results send a loud message that Maruti Suzuki is in a fast lane and should be able to hold on to premium valuations. It posted a beat in net profit and EBITDA numbers while revenues missed estimates, not by a wide margin.
“If we look at the volume growth this quarter they have reported highest ever number for volumes. The realisations were impacted because of higher lower end sales (Auto, Celario). But, going forward we are expecting a strong growth in realisations and volumes and with this, we will be increasing our target price which hovers around Rs8000 now,”
The stock has already rallied over 50 percent so far in the year 2017 to a record high of 8242.40 on Friday.
Here is a list of top five takeaways from Q2 results:
Net Profit:
The net profit rose by 3.4 percent on a YoY basis to Rs2484 crore for the quarter ended September which was higher than a CNBC-TV18 poll of Rs2217.50 crore. The automaker reported a net profit of Rs 2401.50 crore.But, on a quarter-on-quarter basis, Maruti Suzuki’s net profit rose by 59.6 percent. It reported a net profit of Rs1556.40 crore for the quarter ended June.
Revenues:
Total revenues rose by 21.8 percent for the quarter ended September to Rs21,768 crore which was slightly below than CNBC-TV18 poll of 22,014.1 weighed down by low realisations. The company reported total revenues of Rs17869 crore in the corresponding quarter of last fiscal.
EBITDA:
The company reported an EBITDA of Rs3677 crore, up 21.1 percent for the quarter ended September. It reported an EBITDA of Rs3036 crore in the year-ago period. The EBITDA margin stood at 16.9 percent compared to 17 percent reported in the corresponding quarter of last fiscal.The key reason highlighted by Maruti on margins is material cost reduction, economies of scale, and lower discounts.
Total Sales:
The company registered Net Sales of 214381 million, up 21.8 percent over the same period the previous year. It sold a total of 492118 units during the quarter, a growth of 17.6 percent over the same period of the previous year.Sales in the domestic market stood at 457401 million units, a growth of 19.4 percent. Exports were at 34,717 units.
Operating Profit:
The operating profit increased by 24 percent while the net profit increased by 3.4 percent due to lower non-operating income as the yields on investments were lower compared to last year and some impact of commodities and advertisement expenses and increase in effective tax rate.
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