Country’s largest car maker Maruti Suzuki India on Tuesday announced 17.8 per cent increase in its net profit at Rs802.2 crore for the third quarter ended December 31, 2014 on the back of robust sale.
Reacting to the robust earnings, shares of the company opened on a bullish note at Rs3,650, then gained further ground and touched an intra-day high of Rs3,704, up 2.64 per cent from its previous close on the BSE. Finally, it settled with gains of 2.12 per cent, thereby adding Rs2,311 crore to its market capitalisation.
The company, which had posted a net profit of Rs681.15 crore in the same period last fiscal, said material cost reduction initiatives and favourable foreign exchange have also contributed to its bottomline. Net sales during the quarter stood at Rs12,263.14 crore, up 15.5 per cent against Rs10,619.68 crore in the same period previous fiscal. Volume sales in the quarter were up 12.4 per cent at 3,23,911 units compared to 2,88,151 units in the same period last fiscal, it added.
Domestic sales were at 2,95,202 units as against 2,68,185 units in the same period last fiscal. Exports stood at 28,709 units compared to 19,966 units in the year-ago period. Revenue from exports were at Rs1,224 crore during the quarter.“Higher volumes, material cost reduction initiatives and favourable foreign exchange contributed to the bottomline during the quarter,” the company said in a statement.
While commenting on MSI’s result auto analyst, of Kotak Securities Arun Agarwal, said: “MSIl is expected to benefit from multiple earnings growth lever in the next 2-3 years. Expected demand recovery for small cars and new launches will drive volume growth for the company. MSIl’s operating margins is likely to expand on the back of favorable currency, reduction in discounts and benefits of operating leverage. We have a positive view on the stock.”
Speaking to analysts, MSI Chief Financial Officer Ajay Seth said market conditions were still weak and may take some more time for demand to pick up fully. “The (current) situation indicates that we have to support sales with incentives...The quantum of average discounts during the quarter across models was around Rs21,000 per vehicle,” he said, adding the discounts were unlikely to be withdrawn before the second half of next fiscal. Seth said the withdrawal of excise duty concessions and resultant price increase has impacted sales, particularly in the entry level segment.