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Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins! - Views on News from Equitymaster

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  • Aug 2, 2017 - Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins!

Maruti Suzuki Ltd: Bumpy First Quarter. GST dents Margins!
Aug 2, 2017

Maruti Suzuki Ltd has announced its financial results for the first quarter of the financial year 2017-18 (1QFY18). During the quarter, revenues grew by 16.4% YoY and net profits grew by 4.4%.

Performance summary
  • For 1QFY18, net sales grew by 16.4% YoY. The growth in the revenue was primarily driven by the pre-GST buying in the month of June. While volumes were up 13.2% YoY, realisations grew by 2.8% YoY.
  • During the quarter, the company gave special scheme discounts and compensated dealers for GST. This was partially offset by a robust product mix and price hikes. Further, Vitara Brezza, Baleno, and Ciaz retained leadership positions in their respective markets.
  • The special dealer compensation and special scheme discounts on account of GST along with increase in raw material prices, impacted the operating profits and margins. Operating profits grew by 5.3% YoY with margins contracting by 100bps to 12%.
  • Net profits were up 4.4% YoY with margins contracting by 100bps to 8%.

    Standalone Financial Performance Snapshot
    (Rs m) 1QFY17 1QFY18 Change
    No. of Vehicles sold 348,561 394,571 13.2%
    Net sales 169,960 197,774 16.4%
    Expenditure 147,812 174,462 18%
    Operating profit (EBDITA) 22,148 23,312 5.3%
    EBDITA margin (%) 13% 12%  
    Other income 4,881 6,827 39.9%
    Depreciation 6,380 6,839 7.2%
    Interest 181 313 72.9%
    Profit before tax 20,468 22,987 12.3%
    Tax 5,559 7,423 33.5%
    Profit after tax / (loss) 14,909 15,564 4.4%
    Net profit margin (%) 9% 8%  
    No. of shares (m)   302.1  
    Diluted earnings per share (Rs)*   245.7  
    Price to earnings ratio (x)*   31.75  

    *trailing twelve-month earnings

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