Maruti net profit surges 27%

Maruti Suzuki India Ltd, which makes one in every two cars sold in the country, today reported an expected 27 per cent growth in net profit at Rs 466.5 crore for the September quarter, sending its stock to its highest level since listing four years ago.

A survey of eight analysts by news agency Bloomberg had predicted a median estimate of Rs 459 crore. A Reuters poll had forecast net profit of Rs 470 crore.

Total income (net of excise) in the quarter grew 33.7 per cent to Rs 4,735.8 crore.

The company introduced five new models in the past year to beat a slowdown in industry sales and the strategy paid off. Sales in the quarter rose 17.8 per cent to 1,79,154 units.

Between April and September this year, Maruti for the first time sold more cars in India than Suzuki, its 54 per cent stake owner, sold in Japan.

However, operating margin, a key measure of profitability, fell to 13.1 per cent from 13.9 per cent a year earlier on account of higher advertising and promotion costs. The operating profit margin last year was 14.02 per cent.

Yet, the figure is comfortably higher than Toyota Motor Corp's margin of 9.35 per cent and Honda Motor Co's 7.68 per cent, according to data compiled by Bloomberg.

In spite of the current troubles faced by passenger car makers, mainly on account of the rising cost of consumer finance (80 per cent of all purchases are financed through loans), the future is projected to be rosy.

India is the world's second-fastest-growing major economy after China and only seven in 1,000 people own a vehicle here.

Spending on raw material, the company's biggest expense, increased 36 per cent to Rs 3,317 crore in the period.