Maruti Q4FY25: Muted Results, BUY Maintained
MSIL reported muted Q4FY25 performance with lower than anticipated realizations and high other expenses weighed in on overall profitability. Its standalone revenue grew by 6.4% YoY, marginally lower than PLe while it was in-line with consensus estimates. Realization increased by 2.8% YoY, however, UV mix declined sequentially leading realization to decline by 1% QoQ. Gross profit increased by 4.5% YoY while margin contracted by 50bps YoY to 28.1%. Higher other expenses due to the new SMG plant dragged EBITDA lower by 9% YoY and margin contracted by 177bps YoY to 10.5%. Consequently, PAT declined by 4.3% YoY.
The small car segment continues to face weak demand, while overall market demand seems to be in a sluggish trend likely resulting in low single-digit industry growth over the next two years. However, its diverse powertrain portfolio—including CNG, BEV, HEV, and ICE as well as new launches in UVs positions it well to capitalize on supportive state policies promoting hybrids and flex-fuel technologies. Moreover, strong export momentum, driven by increased UV penetration, is expected to support overall growth, particularly through high-margin products. Factoring this, we assume its volume grow at a CAGR of 5.3% over FY25-27E translating to a revenue expansion of 10.4% while EBITDA/EPS is assumed to grow at a CAGR of 11.3%/14.6% over the same period. We retain “BUY” rating with a TP of Rs 14,001 (previous Rs 14,194) valuing it at 24x on its Mar’27 earnings.
Expenses of SMG plant impact profitability: MSIL’s Q4FY25 revenue came in at Rs 406.7bn, against PLe: Rs 415bn; BBGe; Rs 409.3bn. Gross profit came in at Rs 114.4bn, against PLe: Rs 119.1bn, while margin came in at 28.1%. Gross margin was impacted by 51bps YoY due to ad spends and discounts. EBITDA was Rs 42.6bn (PLe: Rs 49.3bn; BBGe: Rs 49bn) while margin contracted to 10.5% (PLe: 11.9%; BBGe: 12%). PAT was Rs 37.1bn (PLe: Rs 38.9bn; BBGe Rs 38.6bn).
Mix impact led to decline in export realization: Domestic volume increased by 2.8% YoY while revenue increased by 6.8% YoY to Rs 351.7bn. Domestic realization increased by 3.9% YoY to Rs 677,010k/units, aided by higher penetration of UVs (37.5%). Exports volume increased by 8.1% YoY and revenue increased by 3.8% YoY to Rs 55bn. Export realization declined by 3.9% YoY to Rs 646,382/unit, impacted by inferior mix. Blended realization increased by 2.8% YoY to Rs 672,698/unit (PLe: Rs 686,339/unit).
Key Concall highlights: 1) The management expects exports volume to grow by ~20% in FY26 mainly driven by the launch of new e-Vitara. 2) MSIL aims to launch e-Vitara towards the end of H1FY25 with targeted volume of ~70k units with large part of it coming in from the exports market. 3) The company aims to launch 2 new models in FY26, both in SUV category. 4) Discounts as compared to Q3FY25 declined by ~40bps to ~Rs 26k/unit. 5) The commercialization of SMG plant in Gujarat led to high expenses and depreciation, impacting its overall profitability. 6) The management expects the industry to grow by 1-2% in FY26 with an aim to outpace the industry growth backed by new models. 7) It entered FY26 with an inventory of ~28 days in the domestic market. 8)
