Maruti Surges to Three-Month High as Revenue Beats Estimates

  • Deliveries of Maruti outpace industrywide sales in quarter
  • New Baleno hatchback, Vitara Brezza SUV attract buyers

Maruti Suzuki India Ltd. shares rose to an almost three-month high after the automaker posted revenue that beat analyst estimates as it sold more of the new Baleno hatchback and automatic variants of some existing models.

The shares gained 3.9 percent to 3,871.55 rupees, the highest level since Feb. 2, at the close in Mumbai. It was the best performer on the benchmark S&P BSE Sensex.

Ravindra C Bhargava speaks on April 26.

Photographer: Udit Kulshrestha/Bloomberg

Total revenue in the quarter through March climbed 12 percent to 153 billion rupees ($2.3 billion), the New Delhi-based unit of Suzuki Motor Corp. said Tuesday. That compares with the 148.8 billion rupee average of 27 analysts’ estimates compiled by Bloomberg.

In the past nine months, India’s biggest automaker by volume has been expanding its portfolio by adding more expensive models such as the Baleno hatchback and Vitara Brezza sport utility vehicle. Maruti has also attracted buyers with automatic transmission variants of its popular models like the Alto minicar and Celerio hatchback.

Net income fell 12 percent to 11.3 billion rupees, trailing the 11.9 billion rupee average of analysts’ estimates compiled by Bloomberg. The rupee declined more than 11 percent against the Japanese yen in the 12 months through March, making components imported from Japan costlier. About 15 percent of parts used by Maruti are imported.

The company expects double-digit growth in sales in the year started April, Chairman R.C. Bhargava said at a press conference in New Delhi Tuesday. The automaker is trying to increase output at its Manesar plant, near New Delhi, and aims to get 10,000 vehicles from Suzuki’s factory in the western Gujarat state, he said. Maruti plans capital expenditure of 44 billion rupees this fiscal year, up from 25 billion rupees in the previous 12-month period.

Diesel Ban

The automaker is not in favor of additional levies on large diesel vehicles to lift a ban on their registrations in New Delhi, Bhargava said. India’s top court in December banned the registrations of vehicles with diesel engines of 2 liters or more as part of steps to clean up the foul air blanketing the national capital.

“Cars are minuscule contributors to pollution and as an industry our view is that pollution from diesel cars is very very small," said Bhargava. "I would expect the Supreme Court and the government to take a balanced decision on this matter.”

The ban has impacted the sales of some automakers in New Delhi, the nation’s biggest auto market, and prompted introductions of models with gasoline options or smaller diesel engines. The Supreme Court extended the ban at the end of March.

Maruti in March started selling its Vitara Brezza compact SUV. The company’s domestic deliveries in the quarter rose 5.1 percent, compared with the 2.5 percent growth in industrywide sales. It introduced the S-Cross crossover in August and Baleno in October.

The carmaker gave about 17,577 rupees discount per car on average in the three months through March, compared with 21,997 rupees in the previous quarter, Chief Financial Officer Ajay Seth said.

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