Maruti Suzuki Q2 Earnings Preview: Margins under pressure amidst demand slowdown

Maruti Suzuki, India’s largest four-wheeler manufacturer, is set to release its Q2FY25 earnings report on October 29. Analysts anticipate a modest performance in revenue and profit, primarily due to sluggish volume growth and high discounting pressures.

According to Zee Business estimates, Maruti Suzuki’s revenue for the quarter is expected to remain nearly flat, with projections of Rs 37,120 crore versus Rs 37,062 crore in the year-ago period—a marginal rise of 0.2 per cent. 

Subdued volumes and margin pressures

Maruti Suzuki’s volumes are expected to decline by 2 per cent year-on-year, delivering approximately 5.4 lakh units for the quarter. Although an increased focus on exports and a shift toward SUVs has supported the company’s product mix, high discounts have impacted overall realizations, which are projected to rise by only 2.4 per cent to Rs 6.87 lakh per unit. Operational headwinds have dampened EBITDA, estimated to decrease by 0.5 per cent to Rs 4,760 crore. This has resulted in a slight dip in EBITDA margins, expected at 12.8 per cent compared to 12.9 per cent last year, as per Zee Business.

Profit and key trends to watch

Maruti Suzuki’s profit after tax (PAT) is anticipated to grow by 2 per cent year-on-year to Rs 3,790 crore, marginally up from Rs 3,717 crore. However, profitability will be impacted by a deferred tax provision of Rs 850 crore, reducing net gains for the quarter. Key market trends to monitor include the demand outlook, as rising vehicle financing costs and potential rural demand slowdowns could impact the company’s future sales. Analysts will also keep an eye on Maruti’s performance in the entry-level and rural segments, which are essential for long-term growth amid potential softening in demand due to a high base effect from last year.

As of October 27, Maruti Suzuki’s shares closed at Rs 11,490, marking a 2.3 per cent decline for the week and a more significant 9 per cent drop over the past six months, reflecting the market’s caution around these headwinds.