Maruti Q3 profit slumps 48% but beats street view; stock soars to 52-week high

Maruti Suzuki India Ltd on Tuesday reported a drastic 48% decline in net profit, as it faced pandemic-related headwinds and a global microchip shortage that forced automobile companies worldwide to cut back on production.

India’s largest carmaker posted a consolidated net profit of Rs 1,011 crore for the third quarter of 2021-22, down from Rs 1,941.4 crore during the same period last year. 

Still, the company managed to beat estimates by analysts, who had projected profit to be around Rs 900-1,000 crore. This helped the company's shares jump almost 7.5% on the BSE to a 52-week high of Rs 8,657.30 apiece.

Net sales fell to Rs 22,187.6 crore from Rs 22,236.7 crore a year earlier.

Maruti said profit was lower despite cost-reduction efforts, due to lower sales volume, high commodity prices and lower non-operating income on account of a mark-to-market impact.

Operating EBIT margin came in at 4.1% in Q3 against 6.7% a year earlier. The profit margin narrowed to 4.6% from 8.7% in the same quarter last year.

The company sold a total of 430,668 units during the quarter, lower than 495,897 units in the same period previous fiscal year. It said that production was constrained by a global shortage in the supply of electronic components because of which an estimated 90,000 units could not be produced.

Other key highlights:

1) Operational earnings before income tax falls to Rs 919 crore from Rs 1,484.8 crore. 

2) Profit before tax drops to Rs 1,221.8 crore from Rs 2,449.8 crore in Q3 last year.

3) Domestic sales stood at 365,673 units in the quarter, against 467,369 units a year earlier.

4) The company clocked its highest ever exports at 64,995 units in Q3, compared with 28,528 units a year earlier.

Management commentary

Maruti said the current financial year has so far been “unique” owing to an “unprecedented global crisis” caused by the pandemic and electronic component shortages. 

“In Quarter 1, the performance of the company was significantly affected due to COVID-19 related disruptions and lockdowns. In Quarter 2 and Quarter 3, the performance of the company was impacted due to electronic component shortages,” Maruti said. 

It said there was no lack of demand as the company had more than 240,000 pending customer orders at the end of the quarter. It also said that, though still unpredictable, the electronics supply situation is improving gradually.

The company hopes to increase production in the fourth quarter, though it would not reach full capacity.