Maruti Suzuki: Maruti margins can rise to double digits with some tailwinds

If the company can deliver an operating profit of above 12% in FY24, it could trigger a margin-led earnings upgrade.

Synopsis

Despite the supply squeeze that resulted in a production loss of around 35,000 units in the second quarter, Maruti Suzuki was able to sell 517,000 units. The mix of the higher operating leverage from greater production and internal cost controls aided the improvement of the operating margin by 200 basis points to 9.3% in the September 2022 quarter. Operating profit per vehicle rose to a 16-quarter high of ₹55,516 per vehicle.

ET Intelligence Group: The second-quarter financial performance of Maruti Suzuki suggests that pressure on operating margin from an unfavourable commodity cycle and production crimped by a supply crunch are behind it and the company is benefiting from a strong product cycle.

The gross margin – a measure of raw material impact on profitability – at India’s largest car maker rose to a record ₹1,55,601 per vehicle in the second quarter thanks to

BY

ET Bureau

3 mins read, Last Updated:

Oct 31, 2022, 06:00 AM IST

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