Hit by higher input costs due to the ongoing West Asia crisis, the country’s largest carmaker - Maruti Suzuki (MSIL) - on Tuesday reported a 26.36% year-on-year decline in its consolidated net profit for the second quarter ended September (Q2FY27) at Rs 2,466 crore. The fall in PAT comes despite the carmaker’s total revenue rising sharply to Rs 53,355 crore in Q2FY27 as against Rs 42,344 crore in the same period of last fiscal.
The company highlighted adverse commodity prices in the context of the West Asia conflict, adverse foreign exchange movement and lower non-operating income due to mark-to-market losses on invested surplus as key reasons for margin movement. MSIL’s Op EBITDA margin declined to 9.4% in Q2FY27 from 12.7% in Q2FY26.
For MSIL, cost of materials consumed in Q2FY27 rose to Rs 37,488 crore from Rs 25,324 crore in the corresponding period last fiscal. Total expenses in Q2 also shot up to Rs 50,619 crore as compared to Rs 39,018.4 crore in the year-ago period.
Despite the challenges, the carmaker achieved its highest-ever quarterly total sales volume of 696,654 units in Q2FY27, up 26.5% y-o-y. MSIL said that its domestic market share increased by 2.2 percentage points to 40.8%. The company’s exports stood at 108,119 units in Q2FY27, as compared to 110,487 units in Q2FY26.
“Recent capacity additions have enabled the Company to serve the strong demand. Even with enhanced production capacity, demand continued to outpace supply resulting in a low network inventory of about 17 days and pending bookings of about 200,000 units at the end of the quarter,” said MSIL in a statement.
The carmaker remains bullish on small cars and expects this segment to have a sizable market. Maruti sold 398,000 small cars in the first half of FY27, compared with 162,000 SUVs.
“Even by 2047, when India will be among the ranks of developed countries, there will be a sizable small-car market in this country because we have a large population,” said MSIL Chairman R.C. Bhargava. Expecting demand momentum to continue amid global headwinds, Bhargava called GST 2.0 reforms a watershed moment for the Indian automobile industry.
Shares of MSIL surged 2% on Tuesday to settle at Rs 11,450 apiece. Dhruv Joshi, Research Analyst, Mirae Asset Sharekhan said that although revenue for the company grew 26% y-o-y to Rs 53340 crores, the raw material inflation which grew 48% y-o-y for the company hampered profitability which declined 27% y-o-y.
“Gross/EBITDA/PAT margins declined by 414bps/308bps/327bps y-o-y highlighting the deteriorating impact of the raw material cost. Maruti continues to struggle with cost optimisation and operational leverage despite strong volume performance and price hikes,” added Joshi.
