Maruti Suzuki profit misses estimate on higher input costs

Japan Times

25-04-2025

Maruti Suzuki India, India's largest carmaker, reported a smaller-than-expected quarterly profit as higher input costs and marketing spends outweighed a modest rise in sales.
Net income fell 4.4% to 37.11 billion rupees ($434 million) for the quarter ended March 31, the firm said in a filing Friday. That fell short of the average profit of 38.57 billion rupees estimated by a survey of analysts.
Revenue rose 6.4% to 406.7 billion rupees compared with the same period last year, missing estimates. Total costs advanced 8.6% to 373.3 billion rupees, with raw material costs surging almost 20%, the filing said.
The disappointing earnings for the sector leader — it had a 41.5% local market share as of the end of March — come amid a broader consumption slack in the world's most populous country which has clipped sales across the board from kitchen staples to SUVs. After clocking an average of 8% for three years, India's growth slowed to 6.5% in the year ended March 31. The International Monetary Fund forecasts this will slip to 6.2% in the current fiscal year.
"This year, the domestic market growth was quite muted,' the company said in the earnings statement.
The Indian unit of Suzuki Motor Corp. said earlier this month that domestic passenger vehicle demand growth is likely to be at just 1% to 2% for year through March 2026.
Raising prices
Maruti posted a 3.5% increase in sales to 604,635 units, buoyed by a 8.1% surge in exports to 85,089 units in the quarter while domestic sales rose by just 2.8%. The company has been raising car prices too this year — from Feb. 1 and then April 8 — to pass on some of the pain from rising input costs and operational expenses.
Operating Ebitda margin was 8.7%, missing the analyst estimate of 9.87%. Margins were hurt by expenses at the new Kharkhoda plant, marketing costs and manufacturing overheads, Maruti said in an post-earnings presentation.
Shares of the company fell as much as 2.31% after the earnings were reported. The firm also announced a dividend of 135 rupees per share.
The carmaker that sparked the affordable small-car revolution in India in the 1980s has been looking to make up for lost ground in the electric vehicle segment, where local rival Tata Motors dominates.
Maruti's first electric vehicle, e VITARA, which was unveiled at the India auto show in January, will hit the roads later this year. It also plans to roll out five more EVs by 2030.
'Greatest focus'
"India is our most important market, and our greatest focus,' Toshihiro Suzuki, chief executive officer of Maruti's Japanese parent told reporters in February, undeterred by the recent tepid growth in the South Asian nation.
Maruti also started its Kharkhoda plant in February in the northern Indian state of Haryana — its first new plant in eight years — marking the first phase of what will become one of Asia's largest passenger vehicle manufacturing facilities by 2028.
The first model being manufactured at the new production line will be its compact sports utility model Brezza.
"Suzuki could retain its lead in India's passenger-car market backed by added capacity and a robust product pipeline for the growing SUV segment,' Bloomberg Intelligence analysts Tatsuo Yoshida and Marie-Christine Yoko Huss wrote in a note on Wednesday.
The company is targeting "sales of 2.54 million units by fiscal 2031 and a 50% market share, but rival product offensives remain a challenge,' they wrote.