Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Maruti Suzuki India Ltd (BOM:532500, Financial) commissioned an additional vehicle assembly line at its Manesar facility, increasing its manufacturing capacity to 900,000 vehicles per annum.
- The company launched the fourth generation Epic New Swift, which has received overwhelming consumer acceptance.
- Maruti Suzuki India Ltd (BOM:532500) achieved a significant milestone by setting up over 3,000 Arena sales outlets and over 5,000 service touch points.
- The company is accelerating its efforts to increase the share of sustainable and renewable energy across its operations, with a target to scale its captive solar capacity to 78.2 megawatts peak by FY24-25.
- The company sold a total of 521,868 vehicles during the quarter, a 4.8% increase compared to the same period the previous year, with export sales growing by 11.6%.
Negative Points
- The demand for passenger vehicles in the domestic market was muted due to the heat wave and elections, which kept potential customers away from showrooms.
- The company had to increase its discount offerings to attract customers, which impacted margins.
- Despite the increase in sales, the volume has sequentially reduced by 10.5%, leading to a negative impact of operating leverage to the tune of 80 basis points.
- Employee costs increased due to wage hikes and seasonality, contributing to a 30 basis points increase in expenses.
- The company faces challenges in maintaining its margins due to fluctuating commodity prices and foreign exchange rates.
Q & A Highlights
Maruti Suzuki India Ltd (BOM:532500) Q1 FY25 Earnings Call Highlights
Q: What were the average discounts for the quarter, and how does it compare to the previous quarter?
A: The average discount for the quarter was approximately INR21,700, compared to INR14,500 in the previous quarter. (Rahul Bharti, Chief Investor Relations Officer)
Q: What is the current capacity utilization at the plant level?
A: The capacity utilization is around 85%. (Rahul Bharti, Chief Investor Relations Officer)
Q: How is the demand environment currently, and what are the expectations for the festive season?
A: The demand is muted in the short term due to factors like the heat wave and elections. However, rural areas are performing better than urban. The company is optimistic about the long-term potential and expects demand to pick up during the festive season. (Rahul Bharti, Chief Investor Relations Officer)
Q: What is the outlook for raw material costs, and are there any expected increases in commodity prices?
A: There have been favorable impacts from steel and precious metals. However, commodity prices are continuously moving, and it's difficult to predict future changes. (Arnab Roy, Chief Financial Officer)
Q: What is the current status of the first-time buyer segment, and how is it impacting hatchback demand?
A: The first-time buyer percentage remains fairly flat between 40% to 43%. The company is optimistic that improvements in rural areas will positively support hatchback demand. (Rahul Bharti, Chief Investor Relations Officer)
Q: What are the export numbers for Q1, and which regions are showing growth?
A: The export sales were 70,560 units, with revenue of INR4.481 crore. Growth regions include the Middle East and Latin America. (Arnab Roy, Chief Financial Officer)
Q: How is the company addressing the increasing mix of SUVs in its product portfolio?
A: The company expects the SUV mix to continue increasing and has made production lines flexible to adapt to market segmentation changes. (Rahul Bharti, Chief Investor Relations Officer)
Q: What is the company's strategy for hybrid vehicles, and how does it view the current taxation regime?
A: Hybrid technology is seen as potent and beneficial for national objectives. The company is optimistic about its adoption and will continue to invest in this technology. (Rahul Bharti, Chief Investor Relations Officer)
Q: What is the company's plan for volume expansion in hybrid vehicles?
A: The company aims to increase hybrid vehicle volumes dynamically, depending on government policies and market conditions. (Rahul Bharti, Chief Investor Relations Officer)
Q: What is the status of the battery manufacturing plant, and what battery chemistry is preferred?
A: The existing plant uses LTO chemistry for hybrid models. The company will provide updates on the new Suzuki project as it progresses. (Rahul Bharti, Chief Investor Relations Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
