India's Trusted Carmaker Maruti Suzuki Reports 60% Profit Jump

Maruti Suzuki India Ltd (M.S.I.L.) reported a 60% jump in net profit at Rs 1,284 crore for the quarter ending March 2015 as against Rs 800 crore in the same period a year ago.India's favorite carmaker was able to push the car market with its launches like Celerio,Ciaz and updated various other models. 

In April, Maruti Suzuki’s despatches were helped by the low base effect of last year when the company sold fewer entry-level cars as well as low inventories at showrooms. The company said higher volumes, lower material cost contributed to its bottomline in Q4. The revenue increased 12% to Rs 13,273 crore from Rs 11,818 crore in March 2014. The company sold a total of 12,92,415 units during the year, a growth of 11.9% over the previous year. Revenue is likely to increase 10.3 percent to Rs 13,350 crore in the quarter ended March 2015 from Rs 12,101.4 crore in the same quarter last fiscal. Overall, it is expected to be a good quarter for Maruti as volume growth was decent at 7 percent Y-o-Y. The company sold 3.46 lakh units in Q4 against 3.25 lakh units sold in the same quarter last fiscal on account of improving consumer sentiment, new launches and return of the first time buyer. In FY15, the volume growth was 12.8 percent at 13 lakh units against a 1.4 percent fall in FY14 and 3.3 percent rise in FY13. Analysts expect Q4 realisations to rise 4.2 percent Y-o-Y to Rs 3.88 lakh per unit. Operating profit (EBITDA) may climb 50 percent year-on-year to Rs 1,876 crore and margin may expand by 373 basis points to 14.03 percent in the quarter gone by. Big gains in margin are expected due to currency tailwinds. Maruti has been consistently gaining market share. In FY15, passenger vehicle market share rose 290 basis points to 45 percent from 42.1 percent in FY14 and 39.2 percent in FY13 due to successful model launches.

The auto industry, as a whole, is surely optimistic about the growth prospects of the auto sector on the back of various policy and project announcements which is expected to promote higher level of economic activity. Another important factor is the reduction of the interest rates which is expected to happen according to financial experts which is expected to impact the automobile sector positively. Therefore, the automobile companies are riding on an optimistic wave, hopeful of improving their earning in FY15.