Q1 2027 Maruti Suzuki India Ltd Earnings Call Transcript
Key Points
- Strong demand momentum across all segments, with small car sales growing 34% and SUV sales growing 44.6% year-on-year, leading to a domestic market share increase of 2.3 percentage points to 41.2%.
- Exports grew by 28.6% in Q1, significantly outperforming the rest of the Indian industry which declined by 8.4%, and the company contributed over 55% of India's total passenger vehicle exports.
- Proactive capacity expansion with the commissioning of two new plants (Kharkhoda and Hansalpur), adding 500,000 units of annual capacity, bringing total capacity to approximately 2.9 million units.
- Successful launch of the new Brezza with a 1.0-L turbo-petrol powertrain, ADAS features, and a 5-star Bharat NCAP safety rating, which has received an encouraging customer response with bookings of about 2,000 per day.
- Healthy demand fundamentals with dealer inventory at a low 13 days and a pending customer order book of about 130,000 units, indicating strong retail demand and potential for future growth.
- The company's strategic decision to support its supplier ecosystem during the West Asia conflict ensured uninterrupted production and record sales, demonstrating supply chain resilience.
- Operating profit (EBIT) margin declined to 5.1% of net sales from 8.8% in the previous quarter, primarily due to commodity-related pressures from the West Asia conflict.
- Commodity costs had an adverse impact of approximately 300 basis points, with nearly 110 basis points attributable to the temporary change in the commodity settlement cycle from a quarterly to a monthly lag basis.
- Net profit declined to INR33.5 billion from INR37.6 billion in the same period last year, despite a significant increase in net sales.
- The company faced multiple adverse factors impacting margins, including higher gas costs (20 bps), unfavorable fixed cost absorption due to inventory depletion (30 bps), adverse foreign exchange (30 bps), higher employee costs (40 bps), and increased depreciation (20 bps).
- The temporary change in the commodity settlement cycle, while supporting suppliers, has accelerated the pass-through of higher costs to the company's quarterly results, creating a short-term profitability headwind.
- The West Asia conflict caused logistical disruptions and volatility in shipping schedules, affecting exports to some markets in the Middle East and creating uncertainty in global supply chains.
Ladies and gentlemen, good day and welcome to Maruti Suzuki Q1 FY 2027 investor conference call. (Operator Instructions) Please note that this conference is being recorded.
I now hand the conference over to Mr. Pranav. Thank you and over to you, sir.
Thank you, Danesh. Ladies and gentlemen, good afternoon once again. Welcome you all to the Q1 FY27 earnings call. May I introduce you to the management team from Maruti Suzuki. Today, we have with us our Chief Investor Relations Officer, Mr. Rahul Bharti; and CFO, Mr. Arnab Roy.
Before we begin, may I remind you of the Safe Harbor. We may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risks that the company faces. I also like to inform you that the call is being recorded, and the audio recording and the transcript will be available at our website. Please note that in case of any inadvertent error
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