Maruti Suzuki

All knew what was coming in Maruti. Its automobile sales have dropped consistently, month after month but at the same time, yen has been appreciating and this is what was expected to give full benefits in terms of better realizations on exports. That is also precisely what happened. The company, in Q1FY14, showed a 10% (YoY) drop in volumes and resultant, net sales dropped 5% at Rs.9995. Yet, it ended the quarter with a 49% jump in net profit at Rs.632 crore. Exports tumbled 35% yet higher realizations is what helped boost the profits. What also helped were the benefits of  merger with Suzuki Powertrain and the current Q1 included its performance.

Helping shore up the bottomline was also the over 7% decline in operating expenses. This was mainly led by the fall in raw material costs, down 15%. Other income surged 82%. EBITDA rose 48% at Rs.1,166 crore and OPM was up 420 bps at 11.4%. The company has managed to overcome this difficult quarter and external circumstance, in terms of yen have also been helpful. But demand continues to remain low. Interest rate sensitive sectors like auto are expected to remain subdued and with fuel prices consistently going up, demand will remain a challenge. Seasonally, Q2 is not very robust and its seasons are the last two quarters. Hopefully, by H2 sentiments too shall improve.