Maruti Suzuki Q3 preview: Profit may decline up to 8% QoQ on lower volumes

Maruti Suzuki Q3FY23 preview: Despite many tailwinds supporting the automobile sector during the three months to December (Q3), India's largest domestic passenger vehicle maker - Maruti Suzuki - may see sequential decline in net profit and revenue due to moderation in sales volume. The company is slated to report its Q3FY23 results on Tuesday, January 24.

"Robust order book across passenger vehicle (PV) original equipment manufacturers (OEMs), strong festive-led retails across segments, inventory de-stocking amid calendar year change, and continued correction in commodity prices were some of the key highlights for Q3FY23. Yet, total volumes at Maruti Suzuki came in at 4.7 lakh units, down 10 per cent quarter-on-quarter (QoQ). Therefore, net sales for the quarter are expected at Rs 28,281 crore, down 5.5 per cent QoQ amid de-growth in volumes and 5 per cent sequential rise in average selling price (ASP)s to Rs 5.8 lakh per unit," ICICI Securities said in an earnings preview report.

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This decline in sales, and discounts on some models, analysts said, may be partially offset by richer product mix (higher share of SUV in sales mix). Overall, revenue is projected to come in the range of Rs 26,482.5 crore to Rs 28,281 crore. Revenue last year (Q3FY22) was Rs 23,246 crore, and Rs 29,931 crore in Q2FY23.

Add to it, the improved product mix, with share of utility vehicles in total volumes at 24 per cent versus 19 per cent in Q2FY23, could aid ebitda and ebitda margin. Ebitda is earnings before interest, tax, depreciation, and amortisation.

"Realisation is expected to increase by 10 per cent YoY (up 3 per cent QoQ) due to a better product-mix, and price hikes. Higher volumes, price hikes, and favourable exchange rate would result in margin expansion both on a YoY and QoQ basis," said Reliance Securities.

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The brokerage has pencilled in ebitda margin at 9.7 per cent, up from 6.7 per cent YoY and 9.3 per cent QoQ. Ebitda, meanwhile, is factored in at Rs 2,672.5 crore by the brokerage.

The same, across six brokerages studied by Business Standard, varies between Rs 2,458.1 crore and Rs 2,823.5 crore.

At the topline level, net profit is expected to increase up to 92 per cent YoY, but decline up to 7.7 per cent per cent QoQ, in the range of Rs 1,794.4 crore to Rs 1,940 crore.

Standalone net profit of Maruti Suzuki was Rs 1,011.3 crore in Q3FY22 and Rs 2,061.5 crore in Q2FY23.

On the bourses, shares of Maruti Suzuki fell 4.7 per cent during the quarter under review, as against 6 per cent rise in the benchmark S&P BSE Sensex. The BSE Auto index, meanwhile, dipped 0.8 per cent in Q3FY23.