Maruti Suzuki to nearly double capacity after profit beat

BLOOMBERG

Maruti Suzuki India Ltd reported a higher-than-expected quarterly profit as car sales recovered and supply chain disruptions eased. It also got in-principle board approval to add capacity of up to 1 million vehicles annually.
Net income rose 42% to 26.2 billion rupees ($321 million) in the three months ended on March 31, compared with the year-ago period, the unit of Japan’s Suzuki Motor Corp said. India’s largest carmaker exceeded the average analyst estimate of 25.65 billion rupees, according to data compiled by Bloomberg.
Maruti, which says its current capacity of 1.3 million units is fully utilised, is looking to nearly double its manufacturing. The capacity addition will be funded by internal accruals, the company said in an exchange filing.
Revenue came in at 320.5 billion rupees, missing estimates. Total costs climbed 18% to 295.4 billion rupees, according to the filing, while raw material expenses fell 8% compared with a year earlier. Maruti also announced a record dividend of 90 rupees per share.
“The company was able to better its operating profit on account of higher sales volume, improved realisation from the market, and favourable forex movement,” it said in a filing to exchanges.
Maruti’s capital expenditure for the year to March 2024 is expected to be about 80 billion rupees, Chairman RC Bhargava told reporters in a post-earnings call. He added that the demand in small cars segment remained flat while it was much stronger in the SUV segment.
Shigetoshi Torii resigned as the joint managing director after Suzuki Motor withdrew nomination, carmaker said. Maruti’s strong earnings as well as plans to boost capacity reflect a surge in consumer demand as passenger vehicle sales in India topped pre-pandemic levels in the year through March. Vehicle prices have moderated with carmakers efficiently managing supply chains amid an improvement in the availability of electronics parts.
The carmaker is expanding its lineup of sports utility vehicles to regain market share relinquished to Hyundai Motor Co, which tapped the aspirational consumer demand for bigger cars and currently dominates the segment. Maruti’s shift in strategy comes as its bread and butter — low-cost, entry-level cars — has taken a hit. It is also moving into cleaner transport with its first electric SUV set to debut in 2025.