Maruti Suzuki Q1 Results Review - Margin Tailwinds Despite Weak Volume Outlook: Yes Securities

Yes Securities Report

Maruti Suzuki India Ltd.’s Q1 FY25 results were healthy as it reported ~17%/~11.6% Adjusted profit after tax beat to our/street estimates led by healthy operating performance. Better than expected Ebitda at Rs 45 billion (estimate: Rs 38.3 billion) was led by;

1. ~60 bp reversal of one-off in raw material reported in Q4 FY24,

2. raw material and forex benefit offset by increased discounts,

3. favorable operating income and other operating cost benefit of ~70bp/ ~30 bp.

However, this was offset by ~80 bp negative operating leverage and ~30 bp impact due to increased advertising and promotion spends. Despite ~10.6% QoQ volume decline, Ebitda/vehicle came in highest at ~Rs 86,300/unit (+44% YoY/ +7.5% QoQ), is considered healthy.

Going ahead, increase in share of CNG, peak average discounts, stable raw material and favorable mix are the positive margins triggers which is expected to playout as volumes are likely to be muted led by industry growth dynamics.

Maruti Suzuki would likely outperform the industry led by strong CNG portfolio with ~33% contribution versus 27% in Q4 FY24.

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