ANALYSTS’ SAY: Maruti Suzuki likely to become profitable in Q1, top-line may improve amid low base due to Covid impact

Analysts expect India’s largest carmaker — Maruti Suzuki to post satisfying first-quarter results of FY21 today. The impact of the second wave of covid is likely visible in its numbers, as the revenue is expected to drop by 25-30 per cent with profit to decline around 30 per cent in the April-June quarter 

BoB Capital Markets said, " We expect a 27 per cent sequential revenue decline, mostly led by a 28 per cent fall in sequential volumes and a 2 per cent rise in average selling price (due to price hikes).” 

See Zee Business Live TV Streaming Below:

Similarly, the operating margin is seen contracting 120 basis points quarter-on-quarter basis, given the raw material cost pressure, BoB Capital Markets said, adding further that it expects a 3 per cent sequential de-growth in adjusted PAT, partially supported by higher other income at Rs 1,130 crore. 

ICICI Securities said, “Volumes for the quarter declined 28.2% QoQ to 3.53 lakh units but revenue decline is expected to be lower at 25% QoQ to Rs 18,026 crore tracking 3.1% sequential rise in ASPs to Rs 4.81 lakh/unit amid price hikes undertaken and slight product mix improvement.” 

Similarly, IIFL Securities expects Q1 FY22 to be robust for the auto major driven by low base effect due to lockdown and restrictions during April – June, as an outcome of the second wave of covid in India. Three-fold growth is expected in per cent times in Maruti’s top-line in Q1, the brokerage said. 

Maruti sales stood at 353,614 units during April – June quarter, rising by a whopping 362 per cent from 76,599 units a year ago same period. Maruti is forecasted to witness double-digit growth in earnings on a sequential basis, IIFL Securities said. 

"We expect a significant increase in revenues on YoY basis in Q1 FY22 driven by low base effect due to the complete lockdown in India in Q1FY21," said Kotak Institutional Equities. It further added, the margin could expand 2,587 bps YoY and fall by 345 bps QoQ led by negative operating leverage.