NEW DELHI (Reuters) - Maruti Suzuki India Ltd , India's biggest carmaker, reported a 21 percent rise in first-quarter net profit, beating estimates, as early signs of an economic revival boosted sales.
Prospects of a pick-up in the economy, spearheaded by the newly elected government of Prime Minister Narendra Modi, could spur a marginal rise in car sales in the fiscal year that started April 1, according to an industry body.
The expected increase follows two consecutive years of decline as buyers were put off by high inflation and interest rates in Asia's third-largest economy.
Maruti's wide dealership network, especially in rural areas where disposable incomes are rising, and a strong pipeline of new vehicles has prepared the carmaker for a recovery in car demand, analysts say.
Maruti, controlled by Japan's Suzuki Motor Corp , said profit for the April-June quarter was 7.62 billion rupees ($126.14 million), up from 6.32 billion rupees in the same year-ago period. Net sales rose about 11 percent to 110.74 billion rupees.
Analysts had expected the company to post a profit of 7.35 billion rupees, according to Thomson Reuters I/B/E/S.
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The sale of Maruti cars and utility vehicles rose 10.3 percent in the April-June quarter, lead by strong performance of its small, entry-level cars targeted mainly at first time buyers that are seen returning to the market.
Total passenger car sales in India rose 2.24 percent in the April-June quarter but weak monsoon rains pose a threat and could especially affect sales of two-wheelers and small cars, which depend largely on demand from rural areas, an industry body said.
(1 US dollar = 60.4100 rupee)
(Reporting by Aditi Shah; Editing by Miral Fahmy)