One of the company's cars. Photo: AFP/Indranil Aditya/NurPhoto

Maruti Suzuki, India’s largest car manufacturer, posted a drop in profit for the fourth quarter, despite higher sales, and failed to meet estimates.

The company reported a standalone net profit of 11.66 billion rupees (US$156 million) for the quarter ended March 31, 9.72% lower than the year-ago period (12.91 billion rupees).

During the quarter, Maruti Suzuki had to contend with an increase in commodity prices, adverse foreign exchange movement and lower non-operating income. In January, the automaker announced a hike in prices of select models by up to 34,000 rupees ($470) due to a rise in input costs.

In fact, this calendar year Maruti Suzuki again raised the prices of select models in April by up to 22,500 rupees ($301).

It posted a standalone revenue of 240.23 billion rupees ($3.22 billion), growth of 32% from the year-ago quarter (182 billion rupees). Sequentially, it was up 2.4% from 234.57 billion rupees.

The numbers missed estimates by a huge margin as analysts had projected the profit after tax to grow anywhere between 37% and 51% from the year-ago quarter. Revenue, on the other hand, was expected to rise upwards of 30% for the same period.

Sales surge

The company sold 492,235 vehicles during the quarter, which is 27.8% higher than the same period the previous year. Sales in the domestic market stood at 456,707 units, up 26.7%, while exports grew 44.4% to 35,528 units.

The company continues to be bullish about sales despite the Covid-19 pandemic in the country. Chairman RC Bhargava said: “With this second wave the demand for personal transport will, if anything, strengthen, not weaken. More and more people will want to have their personal transport.”

However, market analysts fear that frequently localized lockdowns in some cities may hurt the carmaker’s sales or production in the future.

Annual numbers

Meanwhile, for the full fiscal of 2020-21, Maruti reported sales of 1,457,861 units, down 6.7% from the previous year. Sales in the domestic market stood at 1,361,722 units, which is 6.8% less than the previous year, while exports were at 96,139 units, down 5.9%.

Revenue for FY21 declined 7.2% on year to 665.62 billion rupees, whereas net profit declined by 25.1% to 42.29 billion rupees due to the Covid-19 pandemic, the company said in a statement.

During the early days of the pandemic last year, car sales had fallen steeply after the Indian government had a countrywide lockdown on March 25 which lasted about two months. It later picked up after the lockdown was eased and during the festival season.