Maruti Suzuki's strong rebound from a low sales volume base in the quarter to December took the Street completely by surprise. The company's stock price, which is already amongst the most expensive in the automobile industry with a trailing price-to-earnings (or P/E) of close to 30, gained over 4% in value after the results.
With its recently-launched utility vehicle, Ertiga, hitting the right chord with customers and the company growing strength in the passenger car segment, MarutiBSE 4.15 % Suzuki's net realisations improved smartly by 16% year-on-year and 4% sequentially to Rs 3.63 lakh per vehicle. This is by far the best quarterly realisation by the company in the past two years.
While the topline y-o-y growth of 45% was in line with Street expectations as the company sold 26% more vehicles this quarter compared to the previous year due to a production halt at its Manesar plant in October last year, a significant improvement in its earnings before interest, depreciation and tax or EBITDA took the Street by surprise. A better product mix led by strong sales of Ertiga and Swift Dzire, improved export realisations with the yen weakening against the dollar and frequent price hikes undertaken by the company helped to offset the impact of rising input costs. Input costs for the quarter were also lower in relation to sales given the company's continuous cost-reduction efforts.
Raw material cost, as a percentage to sales, for the quarter, was lower by 136 bps to 75% compared to a year ago. Cost reduction was also evident on the labour front as employee cost in relation to sales fell by more than 50 basis points to 2.2%. Maruti has also improvised on its other expenditure, which was 11.7% of sales in December '12 quarter against 13.4% of sales a year ago. A strong topline growth coupled with reduced costs helped the company post 8% EBITDA margins for the quarter, higher by close to 300 bps compared to a year ago.
No comments:
Post a Comment