Maruti Suzuki down for sixth straight day on disappointing Q4 results

Maruti Suzuki India shares were trading lower for the sixth straight day, down 2 per cent, at Rs 6,749 in early morning trade on the BSE after the company reported a weak set of numbers for the March quarter (Q4FY19).

The stock has slipped 10 per cent in the past six trading days, as compared to 1 per cent fall in the benchmark S&P BSE Sensex. It hit a 52-week low of Rs 6,324 on January 28, 2019, on the BSE in intra-day deal.

The automobile major reported 4.6 per cent year on year (YoY) decline in net profit at Rs 1,796 crore in Q4FY19. Net sales grew marginally by 0.7 per cent at Rs 20,738 crore on YoY basis.

Ebitda (earnings before interest, tax, depreciation and amortization) margins slipped 370 bps to 10.5 per cent from 14.2 per cent.

Maruti Suzuki said the recently concluded quarter was marked by adverse foreign exchange rates and commodity prices, higher depreciation and higher sales promotion expenses partially offset by cost reduction efforts.

The management seemed cautious on the demand in FY20 based on the weak consumer sentiments led by increased ownership costs; upcoming regulatory and safety norms which are expected to increase the cost further somewhere in the range of 15-20 per cent going ahead.

“Maruti Suzuki’s Ebitda margin came in significantly below expectations, despite broadly in-line revenue was attributed to factors such as negative operating leverage, adverse inventory impact and Suzuki Motor Gujarat (SMG) plant cost impact and SMG depreciation expense,” analysts at Antique Stock Broking said in result update.

The brokerage firm expects Maruti's margin at sub-13 per cent levels, going ahead. The management's cautious tone, uncertainly over volume growth expectation and lack of any fresh models in sight further intensify concerns on market leader's preparedness as its competitors up the ante with new launches, it said.

Analysts at IDBI Capital expect domestic passenger vehicle industry to grow 5 per cent for FY20/FY21 respectively mainly on account of slowdown in urban areas and increase in cost related to safety and emission norms.

At 10:24 am, the stock was trading 1 per cent lower at Rs 6,823 on the BSE, as compared to 0.32 per cent rise in the S&P BSE Sensex. A combined 800,572 equity shares have changed hands on the counter on the BSE and NSE so far.