Maruti Suzuki Q2 Results: Auto Giant Reports 17% Decline In Net Profit Amid Fall In Sales; Stock Slips

Maruti Suzuki India, the country's largest passenger car manufacturer, reported a 17% decline in its net profit for the second quarter of fiscal year 2025, primarily impacted by subdued domestic sales and a slowdown in demand. The automotive giant's flat revenue and reduced operating margins have further weighed on its quarterly performance, leading to a sharp dip in its share price following the announcement.

Maruti Suzuki's net profit for Q2FY25 took a hit, declining 17.4% year-on-year (YoY) to Rs 3,069.2 crore, down from Rs 3,716.5 crore in Q2FY24. The decrease in net profit was attributed to a provision of Rs 837.6 crore due to changes in tax regulations. The recent Finance Act 2024 withdrew the indexation benefit and revised tax rates on long-term capital gains for debt mutual funds, a change that Maruti Suzuki had already informed the stock exchanges about in August. This regulatory impact put additional strain on the company's profit margin, adding to its YoY decline.

Maruti Suzuki's revenue for the July-September quarter remained largely unchanged, increasing by just 0.4% to Rs 37,202.8 crore from Rs 37,062.1 crore in the same period last year. The minimal growth was attributed to a sluggish domestic sales volume, although the company saw a boost in exports.

In total, Maruti Suzuki sold 541,550 vehicles during the quarter. Domestic sales stood at 463,834 units, representing a 3.9% YoY decrease, while exports were a brighter spot with 77,716 units, marking a growth of 12.1% YoY. While the export market showed a promising uptick, weak domestic demand dampened overall sales volumes, impacting Maruti Suzuki's financial performance.

The company's operating earnings, represented by earnings before interest, tax, depreciation, and amortization (EBITDA), saw a decline. EBITDA fell 7.7% YoY to Rs 4,417 crore from Rs 4,784 crore in Q2FY24, as Maruti Suzuki grappled with higher costs and narrower margins. EBITDA margin dropped by 100 basis points, slipping from 12.9% to 11.9% this quarter.

Maruti Suzuki announced its board's in-principle approval for the amalgamation of Suzuki Motor Gujarat Private Limited (SMG) with Maruti Suzuki India. This merger aims to streamline the company's operations and consolidate its manufacturing capabilities under a single entity, which could enhance efficiency and reduce operational redundancies. Suzuki Motor Gujarat, which was acquired as a wholly-owned subsidiary of Maruti Suzuki last year, will officially be merged as of April 1, 2025, pending regulatory and legal approvals.

In an official statement, Maruti Suzuki highlighted, "The Board considered the structure post-acquisition and gave in-principle approval for the amalgamation of SMG with MSIL. The appointed date for this amalgamation is set for April 1, 2025, subject to all regulatory and legal compliances."

The release of Maruti Suzuki's Q2 results sparked a negative response in the stock market, with the company's share price sliding over 3% to Rs 11,135 on the National Stock Exchange (NSE) by 3 pm on Tuesday. The downturn reflects investors' disappointment with the company's flat revenue and lower-than-expected profit figures. In the last year, Maruti Suzuki's stock has offered modest returns of about 9%.