Maruti Q4 profit misses estimates, expenses a drag

Maruti Suzuki, India's largest carmaker, Friday reported a 4.3% decline in standalone net profit for the fiscal fourth quarter, missing Street estimates, as higher revenues outweighed an increase in expenses. Profit however touched a record in the just-ended financial year.

Profit in the three months ended March 31 fell to ₹3,711.1 crore from ₹3,877.8 crore a year earlier. Brokerage Nomura had estimated the company to report a 2% rise in quarterly net profit at ₹3,962 crore. Revenue was projected to reach ₹40,943 crore, backed by a 4% growth rise in car sales.

Maruti's net sales increased 5.9% to ₹38,848.8 crore in the March quarter. Total expenses climbed 8.7% to ₹37,328.7 crore during the quarter.

The Suzuki Motor Corp unit sold 604,635 vehicles during the period, which it said is a quarterly record. While local sales grew at a modest 2.8% to 519,546 units, exports rose 8% to 85,089 units.

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During the year ended March 31, Maruti posted its highest-ever net profit of ₹13,955.2 crore. It marked a 5.6% increase from ₹13,209.4 crore in FY24. Net sales grew 7.5% to ₹145,115.20 crore in FY25.

"We have done better this year than in the past despite the fact that the domestic market has been very soft and the growth extremely limited," RC Bhargava, chairman of Maruti Suzuki India said, adding, "For a country which is growing and has a vehicle penetration of 34 per 1,000 households-lowest among all other countries in the region-this is a question of worry."

Bhargava said sales are unlikely to grow sharply this fiscal year though Maruti Suzuki will try and outpace the industry. "We are doing better because of exports, which have been buoyant. In the upcoming year, the situation is expected to be similar. Our exports are expected to increase by 20%. That will be the main driver of production, sales and profits," he said.

The maker of Alto and Celerio cars sold 2,234,266 vehicles last fiscal-1,901,681 vehicles locally and exports of 332,585 vehicles. Modest domestic sales growth of 2.7% in FY25 was compensated by a healthy 17.5% export growth, driving total growth of 4.6% for the full year.

Bhargava said lower small car sales-declining 9% in FY25-impacted India's auto industry volumes.

"Without the revival of the small car market, growth in the domestic industry will remain muted. To buy a car priced over ₹10 lakh, you need to have an annual household income of more than ₹12 lakh. How can the car market get to high growth when 88% of households earn less than $14,000 a year," he emphasised.

He said as much as 60-70% of consumers currently do not have the option to buy a car due to affordability issues.

Bhargava noted that while income tax exemptions in the budget will aid in some savings, it is not sufficient to spur purchases in the small car segment due to prevailing high costs.

The cost of small cars due to regulatory changes has gone up by ₹90,000 over the last few years.

Overall, Bhargava said the domestic automobile industry can record healthy gains only if each segment posts increased sales.

"SUVs, of course. But we need the small car segment to grow also. If customers want a small car which looks like an SUV, we have to do that. We cannot dictate taste. But small cars (irrespective of body type) have to grow", he said.