Maruti Suzuki Reports Marginal Revenue Growth and Profit Increase in Q2 Amidst Domestic Sales Dip and Festive Season Surge

Maruti Suzuki India Limited, India's largest carmaker by volume, announced its second-quarter results, showing a modest revenue growth of 1.7% to ₹55,087 crore and a 7.3% increase in profit after tax (PAT) to ₹3,293 crore.

Domestic wholesales declined by 5.1% to 4,40,387 units. The company cited customer deferral of purchases as a primary reason, following price reductions implemented after GST reforms effective September 22.

However, the festive season proved exceptionally strong for Maruti Suzuki. Deliveries reached an all-time high on Dhanteras, and record sales were observed during the Navratri festival, with nearly two lakh vehicles delivered. Following the announcement of reduced prices, the company received 4.5 lakh bookings, indicating robust demand. Senior executive officer, Partho Banerjee, noted a daily booking rate of around 14,000 units, representing over 50% growth compared to the previous year.

To counter domestic market sentiments, Maruti Suzuki significantly boosted its export efforts, which jumped 42.2% to 1,10,487 units in the quarter. This export surge helped achieve an overall sales volume increase of 1.7% to 5,50,874 units.

Increased material costs, by 100 basis points, were attributed to adverse commodity prices and unfavorable foreign exchange movements. The company also incurred higher expenses related to sales promotion, advertisement, and the development of its new greenfield plant in Kharkhoda.

Impact: Despite challenges in domestic sales due to pricing adjustments, the strong performance during the festive season and a significant increase in exports demonstrate Maruti Suzuki's resilience and market strength. These factors are crucial for investor confidence and indicate the company's ability to navigate market fluctuations effectively. The positive booking trend post-price cuts suggests sustained demand. The rise in material and operational costs, however, will be a key area to monitor. Impact Rating: 7/10

Difficult Terms: PAT (Profit After Tax): The net profit of a company after all taxes have been deducted. Wholesales: The sale of goods in large quantities from a producer to a distributor or retailer. GST reforms: Changes made to the Goods and Services Tax system aimed at streamlining taxation. Dhanteras & Navratri: Auspicious Hindu festivals during which purchasing new items, including vehicles, is traditionally considered fortunate. Basis points: A unit of measure equal to one-hundredth of a percent (0.01%). Foreign exchange: Currencies of other countries. Greenfield plant: A new facility built on undeveloped land, often signifying expansion or new operations.