Maruti Suzuki’s Q1 net profit zooms 145%; board approves acquisition of Suzuki Motor Gujarat

• Board gives a nod to acquire the shares of Suzuki Motor Gujarat (SMG) from Suzuki Motor Corporation (SMC).
• Its net profit jumped 145% and revenues went up 22% in the first quarter on a YoY basis.
• Its domestic sales went up 9% and its exports fell by the same quantum during the quarter.

India’s largest carmaker Maruti Suzuki posted a 145% jump in net profit to ₹2,485 crore from ₹1,012 crore on account of larger sales volume, improved realization, cost reduction efforts and higher non-operating income.

Its revenue from operations went up by 22% to ₹30,845 crore from ₹25,286 crore in the same period last year — which is its highest-ever quarterly sales, the company.

Its total sales volumes went up 6.4% to 4.98 lakh units in all, while its domestic sales went up 9.1%.

The company said that it achieved market share of around 20% in the SUV segment supported by a strong product lineup. “We achieved leadership in the price segment of ₹10-20 lakh. Invicto, powered by a strong hybrid powertrain, made a debut in over ₹20 lakh price segment,” the company said.

Its exports however fell 8.9% during the quarter. “Shortage of electronic components in this quarter resulted in over 28,000 vehicles not being produced. Pending customer orders stood at about 355,000 vehicles at the end of the quarter and the company is making efforts to serve these orders fast,” Maruti Suzuki said in the press release.

Its operating EBIT margins expanded by 220 basis points to 7.2% during the quarter. Its profit margins went up by 410 basis points to 8.1%.

The realizations improved due to softening commodity prices, cost-reduction efforts, and higher non-operating income even as it spent more on sales promotions.

On a sequential basis however Maruti’s net profit fell by 5.3% and net sales moved up marginally by 0.1%. Moreover, its sales volumes went down by 3.3%.

Board gives nod to acquire shares of Suzuki Motors Gujarat

Maruti’s board on Monday approved exercising the option to acquire the shares of Suzuki Motor Gujarat (SMG) from Suzuki Motor Corporation (SMC). It also terminated the contract manufacturing agreement with SMG.

This is subject to legal and regulatory compliances including minority shareholders’ approval. The mode of acquisition including consideration to be paid to SMC shall be decided in a subsequent board meeting, the company said.

Maruti Suzuki said that it needs to increase its production capacity to about 4 million cars per annum by 2030-31 – twice from the current levels. Powertrain technologies like EVs, hybrids, CNG, ethanol etc. will co-exist for a reasonably long period of time.

“Managing this scale and complexity of production with multiple powertrains, under different managements, would pose several challenges. The Board of Directors considered this and decided that for the purpose of efficiency in production and supply chain, it is best to bring all production related activities under MSIL,” it said in a release.

There will be no change in actual production, logistics, sales and the cost, as the cars earlier supplied by SMG as a contract manufacturer, will now continue to be supplied as before.

$MARUTI.NSE Q1 results: 🔸Net Proft more than doubles ₹ 2485 Cr 🚀 🔸Revenue up 22%🚀 🔸Further Maruti is set to Acquire Gujarat plant shareholding from Suzuki Corporation subject to approvals! 🔸 Technicals: $MARUTI.NSE Breakout on charts just before results! Will have to wait for tomorrow for confirmation. A move above 9900 can open up Targets of 10500 in a short term

— (@CA_RaghavWadhwa) July 31, 2023