Maruti Suzuki's 2-fold jump in profit misses Street estimates as raw material inflation and chip issues hurt

Maruti Suzuki — India's largest carmaker — on Wednesday reported a net profit of Rs 1,012.8 crore for the April-June period, more than double compared with the corresponding period. Yet, the auto giant's quarterly profit fell short of analysts estimates who expected a 3.5 times year-on-year (YoY) jump.

A surge in raw material prices — thanks to a sustained increase across commodities — and a persistent shortage of semiconductors hurt Maruti Suzuki's profitability.

Yet, Maruti Suzuki managed to beat Street estimates on the revenue front.

Analysts in a CNBC-TV18 poll had pegged Maruti Suzuki's quarterly net profit at Rs 1,540 crore and revenue at Rs 26,103 crore.

The company's EBITDA margin — a key measure of operating profitability — though rose by 260 bps to 7.2 percent for the three-month period, it fell short of analysts' expectation of 8.6 percent.

EBITDA margin determines a company's profits before taking into account the impact of components such as taxes and interest as a percentage of its total sales.

The auto maker said the numbers are not comparable on year-on-year basis due to COVID-related shutdowns and disruptions in the quarter ended June 2021.

Maruti Suzuki said the increase in prices of commodities adversely impacted its operating profit in the three months to June 2022.

"The company was forced to increase prices of vehicles to partially offset this impact. The profit before tax was also impacted by the non-operating income being lower in this quarter due to a mark-to-market loss. The company continued to work on cost reduction efforts to minimise the impact on customers," it said in a statement.

"What is important here is that the product upcycle is back after four years... They have this upgraded mid-cycle refresh on Baleno and upgraded Celerio," Gurmeet Chadha, Managing Partner and CIO at Complete Circle Consultants, told CNBC-TV18.

"They have four SUVs, so even in SUVs, they have this Baleno platform, which is between Brezza and S-Cross, and then they have the SUV that they are co-developing with Toyota, which is in the UV one segment dominated by Creta and Seltos where they have actually lost a lot of market share," he added.