BENGALURU (Reuters) — Maruti Suzuki India, the country’s top carmaker by sales, reported a bigger-than-expected jump in third-quarter profit on Wednesday, buoyed by strong demand for its sport utility vehicles (SUVs).
Indian consumers generally make big-ticket purchases during the festive season, which lasted for a large part for the third quarter. Increased sales of more expensive SUVs, such as ‘Grand Vitara’ and ‘Brezza’, helped boost Maruti’s total sales volumes by 7.6% to about 501,000 units.
The company’s profit after tax for the three months to Dec. 31 rose 33% to 31.3 billion rupees ($377 million). Analysts, on average, expected a profit of 29.25 billion rupees, per LSEG data.
Still, this is the carmaker’s slowest profit growth since it reported a drop in profit in the December 2021 quarter, partly due to a dip in sales of small cars, which also includes hatchbacks such as ‘Baleno’.
They were down throughout last year and extended into the December quarter as high inflation curbed rural spending, the segment’s largest consumer demographic.
The ‘Swift’ hatchback-maker’s revenue from sales rose 14.4% to 318.6 billion rupees.
Its margins on earnings before interest, taxes, depreciation, and amortisation (EBITDA) expanded to 11.7% from 9.8% last year, but declined from 12.9% in the September quarter, per analysts.
Maruti had offered higher year-end and festival discounts in the third quarter which, coupled with higher inventory, led to the sequential margin decline.
Contribution of pricier and margin-boosting utility vehicles, mostly SUVs, to total passenger vehicle sales rose from about 24% last year to nearly 39% in the December quarter.
Maruti shares, which were up on the day, climbed about 3% to the day’s high after reporting results.