Maruti Suzuki Profit Misses Estimates On Higher Tax Outgo

Maruti Suzuki Ltd.’s profit rose marginally in the three months ended December but missed analyst estimates due to higher tax rates and lower non-operating income.

The country’s largest carmaker’s net profit rose nearly 3 percent to Rs 1,799 crore as compared to the same quarter last year, it said in a stock exchange notification. This was below the Bloomberg consensus estimate of Rs 2,006 crore. Revenue rose 14 percent on a yearly basis to Rs 19,283.2 crore in line with estimates.

The operating income or the earnings before interest, tax, depreciation, and amortisation increased 22.1 percent year-on-year to Rs 3,037.8 crore. Higher sales promotion expense and adverse commodity prices put pressure on the margin which contracted 102 basis points to 15.8 percent.

Foreign exchange and commodity prices will continue to be key overhangs for the automaker going ahead.

Maruti revised the royalty calculation terms with its Japanese parent Suzuki Motor favourably. It will lower royalty payments for new models starting with the Ignis, the company said in its filing. The proposal will be implemented after approval by the Suzuki’s board.

Ahead of the earnings announcement, shares of Maruti Suzuki closed 1.7 percent lower at Rs 9,227.20 apiece. The stock trades at 37.3 times its trailing 12-month earnings per share and 33 times its forward one-year earnings estimates. It’s declined 4.6 percent this month.