A robust performance in the July September quarter for Maruti Suzuki India, driven by strong volume growth during the ongoing festival season and market share gains, is expected to keep the stock of the country's largest passenger vehicle (PV) maker on an upward trajectory.
The stock has gained over 4 per cent from its lows on October 4, while the S&P BSE Sensex is down 2 per cent during this period. Over the medium term, new launches (market share gains) and margin improvement, driven by pricing and cost savings, will be the key factors boosting revenues and profits for the market leader.
The company's operating performance in the July-September quarter surpassed Street profit estimates. Lower raw material costs led to a 73 per cent increase in operating profit to 4,780 crore, which was well above estimates.
Despite discounts rising by 28 per cent year-on-year (Y-o-Y) to just under ₹17,800 per unit, raw material costs as a proportion of sales decreased by 250 basis points (bps) to 70.6 per cent.
Lower raw material costs, combined with an improved product mix, resulted in gross margin gains of 250 bps on a Y-o-Y basis and 220 bps on a sequential basis.
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