Maruti Suzuki Q1 Preview: Profit May Jump Up to 37% YoY, Revenue Around 9%

Introduction:

Automobile giant Maruti Suzuki is poised to release its financial results for the June quarter of the fiscal year 2025 (Q1FY25) on Wednesday, July 31, 2023. Analysts are optimistic, anticipating a profit growth of up to 37% year-on-year and a revenue increase of around 8.5%. Despite these positive projections, there are concerns over a potential decline in margins quarter-on-quarter, attributed to commodity pressures and increased discounting.

Additionally, on Monday, July 29, Maruti Suzuki India received a final assessment order imposing a tax demand of Rs 779.2 crore, including interest, along with a Show Cause Notice (SCN) for potential penalties. The company plans to appeal this decision before the Income Tax Appellate Tribunal and has asserted that this order will not impact its financial, operational, or other activities.

On the stock market front, Maruti Suzuki’s shares closed 0.68% higher at Rs 12,763.80. Over the past six months, the stock has surged approximately 27%.

Brokerages’ Predictions for Q1FY25 Results

Revenue and Profit Forecasts:

Analysts forecast revenue to rise to Rs 33,943.6 crore, with a profit of Rs 3,228 crore. However, they predict a decline in the EBITDA margin to 11.4%, a drop of 90 basis points quarter-on-quarter. This decline is due to negative operating leverage, commodity headwinds, and higher discounting in Q1FY25. Despite these challenges, a 5% year-on-year increase in volumes and flat average selling price (ASP) growth is expected.

Maruti Suzuki Q1FY25 Preview: Analysts Predict 37% Profit Growth and 8.5% Revenue Increase:

  • Nuvama’s projections are slightly higher, expecting a profit of Rs 3,071.4 crore and revenue of Rs 34,206.2 crore. They anticipate an EBITDA of Rs 3,624.8 crore, maintaining an EBITDA margin of 12%. The growth in revenue is expected to be supported by increased volume and higher realization, with the EBITDA margin likely to expand due to improved net pricing.

Commodity and Discounting Pressures:

Analysts foresee a sequential decline in margins due to pressures from commodity headwinds and increased discounting strategies. They predict an EBITDA margin of 12%, profit of Rs 3,351.4 crore, and revenue of Rs 34,964.6 crore.

Volume and Realization Growth:

According to Deven Choksey analysts, volumes grew by 4.8% year-on-year, driven by strong performance in utility vehicles and exports, despite a 10.6% sequential contraction. Realization is projected to rise by 2.6% year-on-year. EBITDA margins are expected to benefit from lower raw material costs and an improved product mix, expanding by 320 basis points year-on-year but contracting 114 basis points quarter-on-quarter. Net profit is anticipated to grow 36.2% year-on-

  • year, although it may decline 12.9% quarter-on-quarter.
  • The brokerage estimates the company’s revenue will be Rs 34,839.8 crore, with a profit of Rs 3,440.5 crore and EBITDA of Rs 4,329.4 crore, leading to an EBITDA margin of 12.4%.

Conclusion:

Maruti Suzuki’s Q1FY25 results are eagerly awaited, with expectations of substantial profit and revenue growth despite some margin pressures.

The tax demand and subsequent appeal process add a layer of complexity, but the company’s strong market performance and strategic measures provide a positive outlook. The upcoming financial results will be crucial in assessing the automaker’s ability to navigate commodity challenges and leverage market opportunities.

FAQ:

1. When will Maruti Suzuki release its Q1FY25 financial results?

  • Maruti Suzuki is scheduled to release its financial results for the June quarter of the fiscal year 2025 (Q1FY25) on Wednesday, July 31, 2023.

2. What profit growth is expected for Maruti Suzuki in Q1FY25?

  • Analysts anticipate a profit growth of up to 37% year-on-year for Maruti Suzuki in Q1FY25.

3. How much revenue growth is forecasted for Maruti Suzuki in Q1FY25?

  • Revenue is expected to increase by around 8.5% year-on-year.

4. What are the key factors contributing to the expected decline in margins for Maruti Suzuki?

  • The potential decline in margins is attributed to commodity pressures, elevated discounting, and negative operating leverage.

5. Has Maruti Suzuki faced any recent tax issues?

  • Yes, on July 29, Maruti Suzuki received a final assessment order imposing a tax demand of Rs 779.2 crore, including interest, along with a Show Cause Notice (SCN) for potential penalties. The company plans to appeal this decision.

6. Will the tax order affect Maruti Suzuki’s financial or operational activities?

  • Maruti Suzuki has stated that the tax order will not impact its financial, operational, or other activities.

7. How has Maruti Suzuki’s stock performed recently?

  • Maruti Suzuki’s shares closed 0.68% higher at Rs 12,763.80, and the stock has surged approximately 27% over the past six months.

8. What revenue and profit figures do analysts forecast for Maruti Suzuki’s Q1FY25 results?

  • Analysts forecast revenue of Rs 33,943.6 crore and a profit of Rs 3,228 crore, with an EBITDA margin of 11.4%.

9. What are the predictions from Nuvama for Maruti Suzuki’s Q1FY25 results?

  • Nuvama expects a profit of Rs 3,071.4 crore and revenue of Rs 34,206.2 crore, with an EBITDA of Rs 3,624.8 crore and an EBITDA margin of 12%.

10. How are commodity and discounting pressures expected to impact Maruti Suzuki’s margins?

  • Analysts predict that commodity headwinds and increased discounting strategies will lead to a sequential decline in margins, resulting in an EBITDA margin of around 12%.

11. What growth in volumes and realization do analysts from Deven Choksey forecast?

  • Deven Choksey analysts project a 4.8% year-on-year growth in volumes, driven by strong performance in utility vehicles and exports, and a 2.6% year-on-year increase in realization.

12. What is the anticipated net profit growth for Maruti Suzuki in Q1FY25 according to Deven Choksey analysts?

  • Deven Choksey analysts anticipate a net profit growth of 36.2% year-on-year, though it may decline 12.9% quarter-on-quarter.

13. What are the overall revenue, profit, and EBITDA estimates for Maruti Suzuki from Deven Choksey analysts?

  • The brokerage estimates Maruti Suzuki’s revenue at Rs 34,839.8 crore, profit at Rs 3,440.5 crore, and EBITDA at Rs 4,329.4 crore, with an EBITDA margin of 12.4%.

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