scorecardAs expected, Maruti Suzuki’s profit falls 28% as slow sales hit productivity while costs remained steady
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As expected, Maruti Suzuki’s profit falls 28% as slow sales hit productivity while costs remained steady

As expected, Maruti Suzuki’s profit falls 28% as slow sales hit productivity while costs remained steady
Business2 min read
  • Maruti Suzuki reported around 28% fall in its standalone net profit to ₹1,291.70 crore for the fourth quarter ended March 31.
  • It had reported a net profit of ₹1,795.60 crore in the same period last year.
  • The company’s total revenue was down 15.19% to ₹18,198.70 crore compared to the same time last year. Analysts had expected its fourth quarter profits to fall anywhere between 18-40%.
India’s largest car manufacturer Maruti Suzuki reported around 28% fall in its standalone net profit to ₹1,291.70 crore for the fourth quarter ended March 31.

The stock recovered over 6% on May 13 ahead of the earning as investors cheered the Indian government’s ₹20 lakh crore stimulus package. But, the reality got starker a day after (May 14), and the stock lost 0.53% in early trade.

The company’s total revenue was down 15.19% to ₹18,198.70 crore compared to the same time last year, the company said. Analysts had expected its fourth quarter profits to fall anywhere between 18-40%.

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Although the coronavirus lockdown period was just for one week in the relevant period, it is already known that the car giant saw a steep 16% decline in sales due to bad market sentiment. The company sold around 3.60 lakh vehicles in the fourth-quarter.

At the same time, the margin shrank as costs did not fall with the sales. The company had to pay for salaries, materials and advertisements even though the demand for cars remained weak. The company statement also blamed a one-time hit due to the discontinuation of BS-IV models.

On March 22, the government announced a nationwide lockdown to deal with the COVID-19 pandemic and Maruti to halt operations until May 12 when the Manesar plant reopened.

Since the beginning of 2020, Maruti Suzuki’s share price has taken a massive hit because of the coronavirus pandemic, subdued sales and shutting down of showrooms and factories.

The share price declined over 33% since the beginning of the fourth quarter, till date.

SEE ALSO: Havells shares are riding the stimulus wave but the lockdown has brought down to nearly a third
Maruti Suzuki saw a sales decline of 16% in Jan-March⁠— investors wait to see the margin squeeze

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