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Maruti Suzuki Q4 net seen up 43% on strong operating income

Maruti Suzuki’s fourth quarter profit after tax is seen rising a whopping 43 percent year-on-year to Rs 1,145 crore compared to Rs 800 crore in the year-ago period led by operating performance, according to a CNBC-TV18 poll.

Maruti Suzuki ‘s fourth quarter profit after tax is seen rising a whopping 43 percent year-on-year to Rs 1,145 crore compared to Rs 800 crore in the year-ago period led by operating performance, according to a CNBC-TV18 poll.

Revenue is likely to increase 10.3 percent to Rs 13,350 crore in the quarter ended March 2015 from Rs 12,101.4 crore in the same quarter last fiscal.

Overall, it is expected to be a good quarter for Maruti as volume growth was decent at 7 percent Y-o-Y. The company sold 3.46 lakh units in Q4 against 3.25 lakh units sold in the same quarter last fiscal on account of improving consumer sentiment, new launches and return of the first time buyer.

In FY15, the volume growth was 12.8 percent at 13 lakh units against a 1.4 percent fall in FY14 and 3.3 percent rise in FY13.

Analysts expect Q4 realisations to rise 4.2 percent Y-o-Y to Rs 3.88 lakh per unit.

Operating profit (EBITDA) may climb 50 percent year-on-year to Rs 1,876 crore and margin may expand by 373 basis points to 14.03 percent in the quarter gone by. Big gains in margin are expected due to currency tailwinds.

Yen has depreciated 4 percent sequentially against rupee, which may boost margins by 80 basis points. Around 7 percent depreciation in Q3 may also have a (lagged) positive impact during the quarter.

Maruti has been consistently gaining market share. In FY15, passenger vehicle market share rose 290 basis points to 45 percent from 42.1 percent in FY14 and 39.2 percent in FY13 due to successful model launches.

The stock continued to be top buy for most brokerages. Last week, Goldman Sachs reiterated buy with a target price of Rs 4,318, citing strong product pipeline, entry into fast growing SUV/Crossover/premium hatchback segment. The brokerage sees multiple levers for margin expansion including lowering of discounts, Yen depreciation and commodity deflation.

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