Muted outlook a bigger headache than margins for Maruti Suzuki

With consumers deferring purchases, the company may have to rethink price hikes

A weaker-than-expected December quarter performance, especially on the margin front, saw Maruti Suzuki shed 7.4 per cent in trade on Friday. 

The operating profit margin at 9.8 per cent fell about 600 basis points over the year-ago quarter, and was way below analyst estimates. Analysts had pegged it in the 13-15 per cent range. The sub-10 per cent margin posted by the company is a first in about 20 quarters. 

The biggest item responsible for Maruti missing the margin was higher commodity costs. As a percentage of sales, it was up 320 basis points to 74 per cent. 

Adverse forex