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Maruti Suzuki Profit Rises 56%, Still Short Of Expectations

Why Maruti Suzuki Stock Fell Despite 56 Percent Rise In Profits
Maruti Suzuki Alto cars to be exported out of India are parked in a holding area at Adani Ports and Special Economic Zone (APSEZ) in Mundra, some 400 kms from Ahmedabad. The country's largest car-maker Maruti Suzuki India from Japan's Suzuki Motor Corp declared recently that domestic sales declined around 14 percent in May, while exports fell 27.1 percent. Adani Ports and Special Economic Zone Limited (APSEZ) is India's largest private port and special economic zone. AFP PHOTO / Sam PANTHAKY (Photo credit should read SAM PANTHAKY/AFP/Getty Images)
SAM PANTHAKY via Getty Images
Maruti Suzuki Alto cars to be exported out of India are parked in a holding area at Adani Ports and Special Economic Zone (APSEZ) in Mundra, some 400 kms from Ahmedabad. The country's largest car-maker Maruti Suzuki India from Japan's Suzuki Motor Corp declared recently that domestic sales declined around 14 percent in May, while exports fell 27.1 percent. Adani Ports and Special Economic Zone Limited (APSEZ) is India's largest private port and special economic zone. AFP PHOTO / Sam PANTHAKY (Photo credit should read SAM PANTHAKY/AFP/Getty Images)

NEW DELHI — Maruti Suzuki India Ltd., India's biggest carmaker by sales, said first-quarter net profit rose 56 percent helped by lower costs, favourable foreign exchange rates and higher sales, but still missed bullish analyst estimates.

Net profit stood at Rs 1,192.92 crore in the first quarter riding on high volumes, favourable foreign exchange and cost reduction efforts, the company said in a statement Tuesday.

While profits certainly rose significantly on the back of higher sales of 'Ciaz' and 'DZire' sedans, costs also increased in the same period and eroded gains. Analysts had estimated a profit of Rs 1,270 crore for the India unit of Japan's Suzuki Motor Corp.

The stock price, down 0.3 percent, reflected that despite a sharp rise in profits, market expectations hadn't been met. Maruti's domestic deliveries in the quarter rose at almost double the rate of industrywide sales, and some of that might have been fuelled by discounts. At the same time, competition has intensified with competitors such as Hyundai and Honda introduced new car models.

Net sales grew 18.1 percent to Rs.13,078.30 crore from a year earlier, the company said in a statement. Total sales were 3,41,329 units, a growth of 13.8 percent.

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