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Maruti Suzuki Ltd: Gaining Market Share, Robust Product Mix - Views on News from Equitymaster
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  • Nov 16, 2016 - Maruti Suzuki Ltd: Gaining Market Share, Robust Product Mix

Maruti Suzuki Ltd: Gaining Market Share, Robust Product Mix
Nov 16, 2016

Maruti Suzuki Ltd has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17). During the quarter, revenues grew by 29.3% YoY and net profits grew by 69.6%.

Performance summary
  • For 2QFY17, net sales grew by 29.3% YoY on the back of strong volume and realization growth. Over all volumes for the quarter grew at 18.4% YoY and realizations were up by 9.2%.
  • The utility vehicles and mid-size segment led the volume growth, both grew by 1.49x and 69.1% YoY respectively.
  • 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.
  • Operating profits for the quarters increased by 35.3% YoY with margins expanding by 66bps to 15%. This was largely driven by the increase in the realization (up 9.2% YoY) and some improvement in the other expenses.
  • For 2QFY17, the company paid a royalty of Rs 10.8 billion to Suzuki. This stood 6.1% of the net sales.
  • Net profits grew more than operating profits at 69.6% YoY with margins expanding by 293 bps to 12%. The robust increase in the net profit was due to high other income.
  • During the first half of the financial year 2016-17 (1HFY17), top-line grew by 21.0% YoY and net profits grew by 70.3%.

    Consolidated Financial Performance Snapshot
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    No. of Vehicles sold 353,438 418,470 18.4% 694,668 766,913 10.4%
    Net sales 156,997 202,968 29.3% 307,911 372,685 21.0%
    Expenditure 134,543 172,594 28% 268,405 321,712 19.9%
    Operating profit (EBDITA) 22,454 30,374 35.3% 39,506 50,973 29.0%
    EBDITA margin (%) 14% 15% 66.27 13% 14% 84.69
    Other income 4,736 8,126 71.6% 6,801 12,809 88.3%
    Depreciation 6,694 6,300 -5.9% 13,410 12,689 -5.4%
    Interest 178 197 10.7% 368 378 2.7%
    Profit before tax 20,318 32,003 57.5% 32,529 50,715 55.9%
    Exceptional item -193 1,076 33 1,130
    Tax 5,348 8,023 50.0% 10,099 13,581 34.5%
    Profit after tax / (loss) 14,777 25,056 69.6% 22,463 38,264 70.3%
    Net profit margin (%) 9% 12% 293.25 7% 10%
    No. of shares (m) 302.1
    Diluted earnings per share (Rs)* 199.9
    Price to earnings ratio (x)* 29.40

    *trailing twelve-month earnings

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