Maruti Suzuki India (MARUTI) Q4 19/20 earnings summary

Executive summary

• FY20 vehicle sales fell 16.1% to 1,563,297 units; net sales were ₹716,904 million and PAT was ₹56,506 million, down 24.7% YoY.

• Demand contracted sharply amid higher vehicle acquisition costs, tighter financing, BS-VI transition uncertainty and COVID-19 disruption at year-end.

• Fourteen models transitioned to BS-VI; 775,340 compliant vehicles were sold during FY20, about 50% of domestic sales.

Financial highlights

• Total revenue declined 10.8% to ₹790,314 million; PBT fell 32.5% to ₹70,648 million and PAT fell 24.7% to ₹56,506 million.

• Revenue from operations was ₹756,106 million versus ₹860,203 million; vehicle sales were ₹632,266 million versus ₹747,715 million.

• Operating EBIT was ₹37,769 million versus ₹79,804 million; operating cash flow decreased to ₹34,051 million from ₹65,932 million.

• EPS was ₹187 versus ₹248; the effective corporate tax rate used was 25.168%, down from 34.944% after the reduced-rate election.

Outlook and guidance

• FY21 outlook remained highly uncertain: lockdowns caused almost no sales in April and May 2020, and gradual easing was expected to shape recovery.

• Management expected FY21 industry performance to remain weak absent revival measures; the Chairman said H2 FY21 sales might approach FY20 levels, with FY22 expected to improve.

• Strategy priorities include network expansion, exports, new products and technology, cost optimisation, localisation and capability building.

• Targeted sales of one million green vehicles, including CNG and hybrids, over the next couple of years; CNG portfolio expansion and electric-vehicle field testing continued.