Maruti Suzuki Q3 Results Review - Strong Beat, Led By Better Mix, Higher ‘Other Income’: Motilal Oswal
Maruti Suzuki reported a strong beat in Q3, driven by better mix and higher other income.
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Motilal Oswal Report
Maruti Suzuki India Ltd. reported a strong beat in Q3 FY23, driven by better mix (8% beat on average selling prices) and higher other income.
Revenue/Ebitda/profit after tax grew 25%/82%/1.3 times YoY to ~Rs 290.4 billion /Rs 28.3 billion/Rs 23.5 billion, respectively. Nine months-FY23 revenues/Ebitda/adjusted profit after tax grew 39%/ 2.3 times/ 2.8 times YoY. Volumes grew 8% YoY. ASP grew 15.5% YoY (up 8% QoQ) to Rs 623,400 (our estimate: Rs 575,600) due to better mix, despite higher discounts.
Maruti Suzuki's gross margins improved 260 bps YoY (up 40 bps YoY) to 27.3% (versus estimate 27.6%), led by raw material cost and fotex benefits, diluted by higher discounts.
Recently launched products to reflect in profit and loss from Q1 FY24; commodity price benefit largely reflected in Q3 FY23; and the impact of adverse Japanese yen is expected to reflect from Q1 FY24.
We expect continued improvement in performance and response to new products to act as catalysts for the stock. We upgrade FY23 earnings per share estimates by 14% to reflect the benefit of mix and higher ‘other income’, but reiterate our FY24 estimates as the mix benefit is offset by the forex impact.
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