Maruti Suzuki Q3 Results Review - Strong Show, Improving Volume, Margin Outlook: Dolat Capital

Dolat Capital Report

Despite all odds (semiconductor shortage issue, higher discounts and weaker exports) Maruti Suzuki India Ltd.’s printed a standout performance on margin front in Q3 led by increase in net average selling price (up 8.3% QoQ due to higher proportion of SUVs and bigger cars) and softening commodity prices.

Ebitda grew 2% QoQ to Rs 28.33 billion with resilient margin at 9.8 %(up 50 bps QoQ).

We expect passenger vehicles demand to continue to be strong for the near to medium term led by strong waiting periods for cars and low inventory.

Maruti Suzuki’s current order backlog stands at ~363,000 units and holding only five days of network stock at the end of Q3. As semiconductor availability is expected to improve, we expect strong ramp up in volume in Q4, hence benefit of operating leverage would kick in margin.

Although, Q3 export number was weak due to the issue of dollar availability in emerging markets, expect gradual recovery of export volume from Q4. Grand Vitara contribution would be significant in coming quarter.

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