Maruti Suzuki Q3 Results Preview: Net profit may rise 90% YoY on higher volumes, improved demand

Maruti Suzuki India Limited (MSIL) is expected to report a 90 per cent jump in its net profit to Rs 1,922 crore for the quarter ended 31 December 2022 on higher volumes and improved demand during the quarter. India's largest passenger car manufacturer reported a Profit After Tax (PAT) of Rs 1,011 crore in the year ago period. 

PAT also referred to as net profit is the earnings after the income taxes are accounted for. It is the company's ability to generate returns. 

The company will announce its quarterly earnings on Tuesday, 24 January 2023.     

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According to Zee Business' research strong earnings for the October-December quarter of FY23 would be on the higher volumes. Easing of chip shortages resulted in volume growth during the reporting quarter and an 8.2 per cent YoY uptick to 4,65,911 units is expected. Demand improvement complimented the volume growth.  

Meanwhile, the company’s revenue may grow on a lower base at Rs 27,379 crore in Q3FY23 and will likely be up 17.8 per cent as against Rs 23,246 crore in Q3FY22.

The auto major is expected to report a jump of 72.5 per cent in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) to Rs 2,689 crore from Rs 1,559 crore YoY in the three-month period. 

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The Q3 margin of Maruti Suzuki is likely to increase due to declines in raw material prices and currency benefits. It may swell by 310 basis points (bps) to 9.8 per cent from 6.7 per cent in the December quarter of this fiscal.

On a sequential basis, Maruti is likely to report muted numbers with revenues seen to decline by 6.5 per cent in Q3FY23, according to estimates given by Axis Securities. On QoQ basis, a 10 per cent decline in volumes coupled with discounts on some models, will partially offset the gains by a richer product mix. the brokerage firm noted.  

In line with Zee Business' research, the brokerage sees the EBITDA margin of the auto company improving by 40 bps, sequentially, led by softening in raw material prices. However, Axis Securities also opined that a negative operating leverage may have partly dented margins.

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Shares of Maruti Suzuki on Monday closed flat with a negative bias at Rs 8,425 per share on the NSE. The stock has grown marginally by 4 per cent in the last one year and is down over 2 per cent in the last 6 months on the exchanges.