Release Date: October 29, 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) achieved a significant milestone with its Manesar facility reaching a cumulative production of INR1 crore units, making it the fastest among Suzuki's global facilities to achieve this.
- The company expanded its sales network by inaugurating its 500th NEXA sales outlet, enhancing customer reach across more than 300 cities.
- Maruti Suzuki introduced CNG options in its fourth-generation Epic New Swift, contributing to a growing consumer preference for CNG vehicles, with one in every three cars sold being a CNG vehicle.
- The Grand Vitara and FRONX SUVs achieved impressive sales milestones, with the FRONX being the first SUV from Maruti Suzuki to be exported to Japan.
- The company maintained a strong export performance, commanding nearly 40% of India's total passenger vehicle exports in Q2 and H1, with export volumes growing by 12.1% year-on-year.
Negative Points
- Domestic market volume declined by 3.9% compared to the same period last year, indicating challenges in the domestic market.
- The net profit for the quarter declined due to a provision resulting from the withdrawal of indexation benefit and change in tax rate on long-term capital gains on debt mutual funds.
- Operating profit margin (EBIT) decreased to 10.3% from 11.1% in the previous quarter, affected by adverse commodity prices and higher sales promotion expenses.
- The demand for small cars continues to decline, with the company relying on limited editions to maintain interest in this segment.
- Despite a healthy festive demand outlook, the company anticipates higher sales promotion expenses, which could impact margins.
Q & A Highlights
Q: Can you provide insights on the festive demand outlook and expected retail sales numbers?
A: We have seen a 14% growth in retail sales from the beginning of Shradh until Diwali compared to last year. We expect to close around 297,000 units this festive period, up from 260,000 last year. For the full year, we anticipate a 3.9% growth in retail sales from April to October.
Q: What is the current status of discounts, and how do they affect the inventory and sales?
A: The average discount per car in the quarter was INR29,300. We expect pressure on discounts to be minimal due to comfortable inventory levels, which are expected to be less than one month.
Q: How is the rural market performing compared to urban areas, and what are the trends in vehicle preferences?
A: Rural markets are performing better than urban, with rural sales growing by 8% while urban sales declined by 2%. There is a convergence in consumption patterns, with rural customers increasingly opting for SUVs and premium vehicles.
Q: What are Maruti Suzuki's plans for hybrid and electric vehicles, and how are they being received in the market?
A: We are expanding our hybrid portfolio, with some states offering road tax rebates. Our upcoming electric vehicle will feature a high range and is designed for both domestic and international markets. We plan to launch one EV per year on average until the end of the decade.
Q: Can you comment on the impact of commodity prices and foreign exchange on your financial performance?
A: Commodity prices have been relatively stable, with some fluctuations. We have benefited from favorable foreign exchange rates, which have been accounted for in non-operating income. We are increasing our hedging coverage to manage exchange rate volatility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
