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Maruti Suzuki Ltd: Resilient Quarter amid Uncertainties - Views on News from Equitymaster
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  • Feb 27, 2017 - Maruti Suzuki Ltd: Resilient Quarter amid Uncertainties

Maruti Suzuki Ltd: Resilient Quarter amid Uncertainties
Feb 27, 2017

Maruti Suzuki Ltd has announced its financial results for the third quarter of the financial year 2016-17 (3QFY17). During the quarter, revenues grew by 12.3% YoY and net profits grew by 47.5%.

Performance summary
  • For 3QFY17, net sales grew by 12.3% YoY. Even though demonetisation resulted in some slow down and volumes were marginally up at 3.6% YoY, the realizations were robust and grew by 8.1% YoY.
  • Auto industry faced major headwinds due to demonetisation. The de-growth in the compact division (down 22% YoY) was offset by a strong growth in the UV segment (up 1.8x). In spite of the demonetisation, Maruti continued to gain market share in the UV segment (28.5% against 18% in 3QFY16).
  • The growth in realization has been on the back of robust product mix. VItara Brezza, Baleno, and Ciaz retained leadership positions in their respective markets. Further, company refrained from aggressive discounting given the robust demand for its products.
  • Operating profits for the quarter increased by 16% YoY with margins expanding by 47bps to 15%. This was largely driven by the increase in the realization (up 8.1% YoY) and some improvement in the other expenses.
  • Net profits grew more than operating profits at 47.5% YoY with margins expanding by 246 bps to 10%. The robust increase in the net profit was due to high other income and benign depreciation charges.

    Consolidated Financial Performance Snapshot
    (Rs m) 3QFY16 3QFY17 Change
    No. of Vehicles sold 373,697 387,251 3.6%
    Net sales 150,132 168,648 12.3%
    Expenditure 128,680 143,758 12%
    Operating profit (EBDITA) 21,452 24,890 16.0%
    EBDITA margin (%) 14% 15% 46.98
    Other income 2,425 5,919 144.1%
    Depreciation 7,221 6,349 -12.1%
    Interest 244 290 18.9%
    Profit before tax 16,412 24,170 47.3%
    Tax 4,582 6,725 46.8%
    Profit after tax / (loss) 11,830 17,445 47.5%
    Net profit margin (%) 8% 10% 246.43
    No. of shares (m) 302.1
    Diluted earnings per share (Rs)* 223.9
    Price to earnings ratio (x)* 26.86

    *trailing twelve-month earnings

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