Maruti Q4 preview: PAT seen up 32% YoY; commodity prices to dent margins

Buoyed by rural demand despite a slowing economy and a gradual uptick in commodity prices, the auto sector is likely to report a healthy growth in sales numbers at the aggregate level during the January – March 2021 (Q4FY21) quarter, say analysts. Operating margins, however, are likely to remain under pressure during the period under review.

The full impact of commodity price rise, analysts say, will be felt as we head deeper into 2021. To offset the impact, Maruti Suzuki has already hiked the prices of select models in April 2021 by up to Rs 22,500. This is the second hike in calendar year 2021. Earlier in January, Maruti Suzuki had hiked prices of select models by up to Rs 34,000 due to rising input costs. At the bourses, however, the stock has been an underperformer in the January - March 2021 quarter, ACE Equity data show.

The company is scheduled to report its Q4FY21 numbers on Tuesday, April 27. Here is what leading brokerages expect.

KR Choksey Securities

Revenue will see sharp recovery of 34 per cent YoY / 4 per cent QoQ on the back of volume growth of 28 per cent YoY at 492,235 units. PAT is likely to grow 51 per cent YoY to Rs 1,948.9 crore (Rs 1,996.7 crore in the December 2020 quarter). Ebitda margin is pegged at 9.5 per cent in Q4FY21 versus 8.4 per cent in the previous corresponding fiscal and 9.4 per cent in Q3FY21.

Maruti stock performance

Average selling price is expected to rise by about 3-5 per cent YoY due to rise in product prices, better product mix and lower discounts offered during the quarter.

Demand dynamics for passenger vehicles (PV), both domestic and exports, product plans for the electric vehicle (EV) segment and new model launches, inventory channel status, cost cutting initiatives and the market response to BS-VI compliant vehicles are some of the key things to monitor.

Axis Securities

We expect revenues to grow by 31 per cent, led by 28 per cent YoY increase in volumes in Q4FY21 and 3.5 per cent increase in average selling prices (ASPs). Estimate earnings before interest, taxes, depreciation and amortisation (Ebitda) to rise by 39 per cent YoY, led by cost-cutting initiatives. Gross margin, however, is likely to decline by 320 basis points (bps) on YoY basis to 26.5 per cent as input costs bite. Profit after tax (PAT) is estimated at Rs 1,768 crore, while revenue is estimated at Rs 23,877 crore in the December 2020 quarter.

Kotak Securities

Revenue is expected to rise by 30 per cent YOY in Q4FY21, led by 28 per cent YoY increase in volumes during the period under review. We estimate gross margin to decline by 320 bps YoY. Adjusted net profit is pegged at Rs 1,850.7 crore, a fall of 4.7 per cent QoQ, but a rise of around 43 per cent YoY.

Emkay Global

Revenues are likely to grow QoQ due to higher realisation on account of price increases, lower discounts and benign mix (higher share of utility vehicles and premium hatchbacks). EBITDA margin is likely to contract on higher input costs. Passenger vehicle (PV) demand remains buoyant and several models are in the waiting period. See PAT at Rs 1,766.7 crore for the period under review, up 37 per cent YoY, but down 9 per cent sequentially.

Brokerage expectations