Maruti Suzuki India Ltd., the country's largest carmaker, announced fourth-quarter profit that fell short of expectations, primarily due to escalating costs influenced by the Iran war. Net income for the period ending March was 35.9 billion rupees ($380 million), missing the Bloomberg-compiled average estimate of 40.9 billion rupees. However, revenue for the quarter climbed to 524.5 billion rupees, surpassing the estimated 508.8 billion rupees.
In a related vein, the company's Q1 FY27 results are anticipated to show muted profit growth despite strong revenue. Brokers estimate revenue growth of 31% year-over-year, but project a 7% decline in net profit due to higher commodity costs, increased discounts, and reduced other income. Some analysts, like Antique, expect a more significant 18% year-over-year drop in profit. Motilal Oswal is more optimistic, forecasting 4% year-over-year profit growth.
Maruti's margins are also under pressure. For the March quarter, margins contracted 270 basis points to 7.2%. For Q1 FY27, EBITDA margins are expected to contract further, with Kotak projecting a 230 basis point quarter-over-quarter contraction to 9.4%. Key factors contributing to this contraction include higher raw material costs, start-up expenses, increased manufacturing costs, and potential annual employee appraisals. The company also reported a 67.3% drop in other income, including investment earnings, impacting profitability.
Despite the profit challenges, Maruti Suzuki saw an overall sales volume increase of 1.1% in Q1 FY26, with domestic sales declining 4.5% but exports surging by 37.4%. Total revenue from operations for Q1 FY26 rose over 8% year-over-year to 384.14 billion rupees ($4.6 billion). The company also reported pending customer orders of approximately 190,000 vehicles at year-end, indicating strong demand despite production constraints.
