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Maruti Suzuki reported a 65.35% plunge in net profits at Rs 475.3 crores during the July to September quarter compared to Rs. 1371.6 crores last year. However, the company’s net profit increased marginally from Rs 440 crores when compared to the April to June quarter in 2021.

Maruti’s EBITDA came at Rs. 855 crores, down over 56% suggesting that the lockdown and semiconductor chip shortage gloom over the automobile industry is far from over. 

However, Maruti’s net sales rose by 9% to Rs 19,297 crores against Rs 17,689 crore. Total revenue from operations stood at Rs 20,538 crores against Rs 18,744 crores, rising by 9% in comparison to last year in the same quarter. 

Maruti Suzuki in its filing attributed the abysmal margin and profit figures to an acute shortage of chips/semiconductors and unprecedented rise in commodity prices like steel, aluminium (and other important metals related to the auto industry). 

Read more on Groww: Maruti Suzuki & Chip Shortage

The automobile giant sold a total of 3,79,541 units during the quarter under review. Sales in the domestic market were recorded at 3,20,144 units. However, export sales were recorded higher than any quarter ever at 59,408 units. 

The scrip remained largely flat on the Dalal street, fluctuating between 0.5 to 0.9% gains after the company posted its second quarter results. 

Hits

  • Net sales rose 9% y-o-y from Rs.17,689.80 crores to Rs 19,297 crores 
  • Revenue from operations was recorded at Rs. 20,538 crores, rising 9% against Rs. 18,744 crores in the year ago period.
  • Total units sold by Maruti stood at 3,79,541 units 
  • Exports stood at a record high of nearly 60,000 units

Misses

  • Maruti Suzuki posted a record plunge in PAT at Rs. 475 crores, down nearly 65% from Rs 1371.6 crores YoY.
  • EBITDA came down severely by 56% at Rs. 855 crores.
  • An estimated 1,16,000 vehicles (domestic models), owing to electronic components and chip shortage could not be manufactured. 
  • Net sales volume dipped from 3.93 lakh units to 3.79 lakh units YoY.
  • The company has nearly 2 lakh pending customer orders, stated for delivery this quarter.
  • Maruti fears more carnage and decreased production owing to semiconductor shortage and pandemic woes. 
  • Margins have been recorded low as the company continues to absorb price shock on behalf of consumers.  
  • Maruti to slash output by over 60%in September over chip shortage

Maruti Suzuki in news

  • CCI slaps Maruti with a Rs. 200 crore penalty over dealer discount policy
  • Maruti announced its largest-ever recall in view to rectify safety defects and replace faulty components. 
  • Maruti Suzuki plans on getting at least 50% of its customer’s financing transactions executed through its Smart Finance platform. The platform has distributed nearly Rs.6500 crores worth of loans in the past months. 
  • Suzuki along with Denso and Toshiba aim to commercially produce lithium-ion cells at their joint venture unit from December. 
  • Maruti mulls hiking prices across models from September
  • Samsung beats Maruti Suzuki as the largest consumer-facing multinational company in the country.

Sector talk

The automobile sector has been having it rough and the New Delhi headquartered Suzuki is no different. It has remained under intense pressure from the rising prices of steel, aluminum, etc besides the pandemic shock. It has been trying its level best to absorb the cost that has led to increased input cost and profit hitting. The company remains unsure of how long it can continue to do so. 

Majority of the car makers have been forced to take production cuts as not only is there an acute shortage of chips and semiconductors, but increased demand for consumer electronics that employ these very chips. 

Other things to watch out for

  • The automobile sector has been ridden with crisis off-late. COVID-19 pandemic, and the semiconductor chip shortage continue to hamper growth in this sector.
  • India continues to retain its position as the fifth-largest automaker in the world and a major attraction for foreign investors as well as players to set up shop. 
  • Maruti Suzuki has announced production cuts and has openly commented that it may not be too keen on electric vehicles just yet. 
  • Maruti Suzuki’s stock has appreciated by 163% over the last year and continues to be a Nifty 50 stock. 
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