Maruti Suzuki Shares Drop 6% on Weak Q2 Results as Profits Decline 17% YoY - Read Now

Shares of India's largest automobile manufacturer Maruti Suzuki plunged nearly 6% on October 29, 2024, as the company's Q2FY25 results were much lower than market expectations. Standalone profit of the company had slipped by a staggering 17.4% year over year to Rs 3,069.2 crore from Rs 3,716.5 crore in Q2FY24. Investors were worried as this was the lowest since March 2021. Its shares hit an intraday low of Rs 10,833.85.

Q2FY25 Maruti Suzuki: Revenue from Operations stood at Rs 37,202.8 crore, YoY growth of 0.4%; that had been Rs 37,062.1 crore in the same quarter last year. The revenue grew by mere margins; however, EBITDA came in lower by 7.7% at Rs 4,416.6 crore, as against the same quarter of the last fiscal. The EBITDA margin declined by 100 basis points to 11.9% in Q2FY25 from 12.9% in Q2FY24, which is an important factor that shows a rise in pressure on operations.

Sales volume and market performance
In the quarter, Maruti Suzuki sold 541,550 vehicles. In the domestic market, the sales dropped 3.9% at 463,834 units in the same period last year. This, however was offset somewhat by exports, up 12.1% YoY, shipping out 77,716 units. Mixed messages emanate from the sales volume figures of Maruti Suzuki regarding its market reach, as there lies both challenge and area for growth.
Investor Response and Market Impact
In less than two hours into trade, the weaker-than-expected Q2 earnings report had an immediate impact on Maruti Suzuki's share price, which fell 5.64% to Rs 10,902.40 a share, lagging behind the broader BSE Sensex, which was up 0.23% at 79,820.90 levels. Analysts said that the company has eroded profit margins and lacks growth in operating revenue that may send a word of caution among investors.

These facts and figures speak clearly of the persisting problems at the Indian automotive sector at large with the hike in operating expenses alongside slowing Indian demand for car sales during the second quarter. Therefore, from the case study of performance of Q2FY25, the Maruti Suzuki Company went on to present a pretty squeezed operating scene even as exports sales picked up steam. There is greater interest now amongst analysts pertaining to whether such trends revert on the quarters following the recently reported numbers on Maruti Suzuki in regard to some recovery at domestic sales to regain traction going forward again becoming a vital ingredient in absolute business outcomes.

Maruti Suzuki needs to ensure these plans are on course since investor confidence is key going forward. The effort by the company to export its cars is laudable, but the negative decline in sales at home calls for future growth. The road to Maruti Suzuki's revival is bound to be along a trajectory that optimizes its efficiency of operations and builds into growth markets with increasing export opportunities considering a very demanding Indian automobile market.

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