India's top carmaker Maruti profit jumps, flags chip issues

FILE PHOTO: Corporate office of Maruti Suzuki India Limited is pictured in New Delhi

By Sethuraman N R

BENGALURU (Reuters) -Maruti Suzuki India Ltd on Friday reported a four-fold jump in quarterly profit beating estimates, driven by record sales volume and easing commodity prices, and again cautioned of a chip shortage over the next few months.

Maruti, which has about 40% market share in India's passenger vehicle market, sold a record 517,395 vehicles during the quarter, up 36% from last year, the Indian unit of Japan's Suzuki Motor Corp said in an exchange filing.

However, a shortage of electronic components hit its second quarter production by about 35,000 vehicles.

Still, there is "no certainty" of semiconductor supplies over next five months, Chairman R C Bhargava said in a news conference.

Meanwhile, a decline in raw material prices, coupled with price hikes and improved supply chain dynamics for semi-conductor chips helped Maruti improve its second quarter earnings margin before interest, taxes, depreciation, and amortization (EBITDA) - a key measure of profitability.

EBITDA margin for the quarter stood at 9.25%, expanding from 7.2% last quarter and 4.2% a year ago.

The company's pending customer orders surged to about 412,000 vehicles at the end of September from 280,000 in June quarter, reflecting a strong demand.

"The company has addressed white spaces in its portfolio through the launch of Brezza and Grand Vitara (sport utility vehicles)," said Mansi Lall, research associate at Prabhudas Lilladher.

"However, higher competition in the SUV space and slow revival in the entry segment still remains a concern," Lall added.

Standalone net profit more than quadrupled to 20.62 billion Indian rupees ($250.03 million) for the quarter ended Sept. 30, while analysts were expecting a profit of 19.13 billion rupees, according to Refinitiv IBES data.

Maruti's shares ended up 5% at their highest close since July 2018, taking the year-to-date gains to about 28%.

($1 = 82.4700 Indian rupees)

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Dhanya Ann Thoppil)