Maruti Suzuki India Ltd Quarterly Results Q3 FY 25 stock analysis

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Sector Outlook: Netural

Uptick in volumes drive growth

Maruti Suzuki reported strong revenue of ₹3,84,921 million for the quarter, growing 3.5% compared to last quarter and 15.6% compared to last year. This growth was mainly due to higher sales volumes, a better mix of premium models, and strong demand for SUVs and exports.

Gross profit stood at ₹1,10,070 million, up 4.5% from last quarter and 13.0% from last year. The gross margin was 28.6%, helped by lower material costs.
EBITDA (operating profit) came in at ₹44,703 million, increasing 1.2% from last quarter and 14.4% from last year, aligning with market expectations. However, EBITDA margin slightly dropped to 12.4% due to currency fluctuations and higher discounts.
Net profit (PAT) stood at ₹35,250 million, increasing 14.9% from last quarter and 12.6% from last year, with a profit margin of 9.2%.

Sales Performance:

Total sales: 5,66,213 units (up 4.6% from last quarter and 13.0% from last year).
Domestic sales: 4,66,993 units (up 0.7% from last quarter and 8.7% from last year).
Export sales: 99,220 units, showing a strong 27.7% growth from last quarter and 38.2% from last year.
Retail sales were approximately 5,73,000 units.

Overall, Maruti Suzuki had a solid quarter with strong sales, benefiting from increased demand for SUVs and exports, despite minor margin pressure.

Key Concall Highlights

Business Performance:

Retail sales grew only 0.4% in the first half of the fiscal year compared to last year, but strong Q3 sales improved total 9MFY25 retail growth to 3.5%.
The company ended the quarter with 9 days of inventory.
A recent price hike is expected to impact net sales by 30 basis points (bps).

Exports:

The company held 49% of India’s total passenger vehicle exports in Q3FY25.
Export revenue for the quarter was ₹65,000 million.
Maruti Suzuki continues to see strong export growth in markets like Latin America, Africa, the Middle East, and ASEAN.

Margins & Expenses:

Sales promotions were 20 bps higher due to seasonality and increased discounts.
Advertising expenses increased by 40 bps due to new model launches like the All-New Dzire and e-Vitara promotions.
Currency impact added 20 bps pressure due to an unfavorable yen exchange rate.
Depreciation costs rose 20 bps, linked to the capitalization of new facilities in the upcoming Kharkhoda plant.

Demand Outlook:

Rural demand is gradually shifting towards premium products, a trend previously seen in urban areas.
The entry-level hatchback segment is declining, while the mid-hatchback segment is stable, and the premium hatchback segment is growing.
Overall demand remains uncertain, and further clarity will be provided after the market consensus on growth in February.

New Launch:

Maruti Suzuki unveiled its first electric SUV, the e-Vitara, at Bharat Mobility Global Expo 2025.
The e-Vitara will be manufactured in India and exported to 100 countries.
The company aims to become India’s largest EV manufacturer in its first year of production.

Valuation and Outlook

Maruti Suzuki India delivered a steady financial performance this quarter with strong revenue growth. The increase in sales was mainly due to a better product mix, driven by the rising popularity of SUVs and strong demand for spare parts. However, the company faced margin pressure due to higher discounts and promotional expenses. Despite these challenges, cost benefits from better average selling prices (ASP), lower raw material costs, and efficient operations helped prevent a further decline in margins.

A key highlight of the quarter was strong export performance, showing Maruti’s gradual recovery in international markets. The company plans to launch two new models – Fronx and Jimny – for export, which is expected to further boost sales. Looking ahead, Maruti Suzuki is focused on expanding its electric vehicle (EV) lineup while continuing to improve its traditional fuel-based (ICE) models. However, given the weak overall industry demand, we remain cautiously optimistic about the company’s growth prospects.