Maruti Suzuki Net Beats Estimates After Demand Rebounds

Maruti Suzuki India Ltd., the nation’s biggest carmaker by market share, reported profit that beat analyst estimates as demand for vehicles rebounded amid expectations a new government will spur an economic revival.

Net income at Suzuki Motor Corp.’s Indian unit rose 21 percent to 7.62 billion rupees ($126 million) in the three months ended June, according to a filing by the New Delhi-based company today. First-quarter profit beat the 7.29 billion-rupee median of 35 analysts’ estimates compiled by Bloomberg.

Passenger vehicle sales rebounded last quarter after a new government led by Prime Minister Narendra Modi took office in May on the back of promises to spur economic growth and infrastructure spending. In June, the government extended a tax cut on automobiles for six months to boost demand.

New models at Maruti “could result in significant jump in volumes boosted by strong pent-up demand from the past two years,” Bhaumik Bhatia, an analyst at IDBI Capital Market Services Ltd. in Mumbai, wrote in a July 7 report. “We expect coming months to set a clear trend of the extent of demand improvement across segments.”

Maruti rose 0.1 percent to 2,555.75 rupees as of 2:14 p.m. in Mumbai trading, while the S&P BSE Sensex fell 0.2 percent.

Sales rose 11 percent to 111 billion rupees, lagging behind the 113.1 billion-rupee median of 36 analysts’ estimates compiled by Bloomberg. Maruti’s deliveries rose 13 percent from a year earlier to 299,894 units in the three months ended June as higher exports and local demand spurred a rebound from the previous quarter’s 5.5 percent drop.

“Cost reduction and localization initiatives, growth in volumes” helped boost earnings, Maruti said in the filing.

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