Maruti net rises 23% as India top seller seizes on SUV boom

Bloomberg

Maruti Suzuki India Ltd.’s profit climbed 23 percent as demand for its Vitara Brezza sport utility vehicle led a more than doubling of sales in India’s fastest-growing segment.
Net income in the quarter through June rose to 14.9 billion rupees ($221 million) from 12.1 billion rupees a year earlier, the New Delhi-based unit of Suzuki Motor Corp. said on Tuesday. Net sales climbed 12 percent to 146.5 billion rupees.
Maruti, renowned for building mostly cheap and fuel efficient vehicles, is now adding more expensive models such as the Baleno hatchback and Vitara Brezza SUV to boost profitability. India’s top-selling automaker saw surging demand for those models help offset drags on earnings from a stronger yen and production losses related to a fire in May at air-conditioning systems maker Subros Ltd.
The automaker sees benign fuel prices and a gradual improvement in market sentiment going forward, it said in the statement. There will be uncertainty on foreign exchange and commodity prices, the company said, without elaborating.
“Looking forward, the biggest worry for Maruti is the capacity constraint they are facing,” Nitesh Sharma, an analyst at PhillipCapital (India), said by phone. “The demand is very robust, but they just don’t have the capacity to cater to this demand.”
Maruti’s Chairman R.C. Bhargava had said in April that the automaker is trying to increase output at its Manesar plant, near New Delhi, and aims to get 10,000 vehicles from Suzuki’s factory in the western Gujarat state.
Shares of Maruti fell 1.7 percent to 4,471.30 rupees at the close in Mumbai, compared with the 0.4 percent
decline in the benchmark S&P BSE Sensex.
Domestic deliveries for Maruti rose 5.4 percent in the quarter, compared with the 6.7 percent growth in industrywide sales. While sales of its utility vehicles including Vitara Brezza more than doubled, deliveries of its minicars such as the Alto declined 12 percent.