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Maruti Suzuki India Ltd

| Q2 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤31st Oct 25

Summary : Maruti Suzuki reported strong Q2 FY26 results, driven by new BEV and SUV launches, robust exports, and festive demand, while targeting 50% market share and 10% EBIT margin by FY30-31.

Management Perspective positive : Management expressed heartfelt gratitude for GST reform, noted robust export growth, and highlighted strong bookings for new models. They also stated clear goals for market share and EBIT margin, indicating confidence.

Concall Report Analysis & Insights

Business Overview

  1. Q2 FY26 net sales reached INR 401.3 billion, up from INR 355.8 billion year-over-year.
  2. Net profit for Q2 FY26 was INR 32.9 billion, compared to INR 30.6 billion last year.
  3. Total Q2 sales were 550,874 units, with domestic sales down 5.1% and exports up 42.2%.
  4. Launched e VITARA BEV for India and export to over 100 countries, expanding carbon neutrality efforts.
  5. New VICTORIS SUV garnered over 30,000 bookings shortly after its launch.

Future Growth Prospects

  1. Company plans to launch eight more SUVs by FY 2030-31 to boost market share.
  2. Targeting 50% market share and 10% EBIT margin by FY 2030-31.
  3. e VITARA BEV exports to over 100 countries, including Europe and Japan, have commenced.
  4. Small car segment is expected to grow faster, with October retail sales up 30%.
  5. Production is being stretched to meet demand, with some models on a waitlist.

Management Insights

  1. Expressed gratitude for GST reform, which boosted overall consumption sentiment in India.
  2. Highlighted the start of e VITARA BEV production and lithium-ion battery manufacturing as "Make in India" milestones.
  3. Noted strong retail sales post-September 22nd, with festive season sales being exceptionally good.
  4. Emphasized a global philosophy of serving customers to achieve 50% market share.
  5. Stated that 10% EBIT margin and 50% market share by FY 2030-31 are clear management goals.

Signs of Skepticism

  1. Management noted "an element of deferred sales" in festive numbers, questioning sustainability.
  2. Stated it's "very difficult to predict the future" regarding sustained growth levels.
  3. Acknowledged that achieving 50% market share would be "more difficult than it has ever been."
  4. Avoided giving specific forward-looking outlooks on gross margins due to multiple factors.

Risk Factors

  1. Domestic sales were impacted by anticipated GST price reductions from mid-August to September.
  2. Sustainability of the strong festive season sales momentum is yet to be clearly assessed.
  3. Operating margins were partially offset by higher sales promotion and advertisement expenses.
  4. Adverse forex (JPY) and commodity (PGM) prices negatively impacted margins by 30 bps.
  5. Hardening bond yields led to an unfavorable mark-to-market impact on invested surplus.

Good To Know

  1. Company inaugurated its 5,000th ARENA service touchpoint, totaling 5,640 across India.
  2. Fronx became the fastest SUV from India to achieve 100,000 export units.
  3. Jimny 5-door surpassed 1 lakh cumulative export units since its 2023 debut.
  4. Q2 FY26 operating profit margin (EBIT) increased to 8.5% from 8.3% sequentially.
  5. Depreciation increase was attributed to the new Kharkhoda plant and VICTORIS model dies/moulds.

Key Drivers

  1. e VITARA BEV exports to 100+ countries.
  2. New VICTORIS SUV strong booking demand.
  3. Eight new SUVs planned by FY30-31.
  4. Small car segment showing strong recovery.

Key Analyst Discussions

Competitive Environment

  1. Analysts asked about the strategy to regain 50% market share.
  2. Questions on how small car recovery impacts the SUV-focused launch cycle.
  3. Inquiries about the importance of 50% market share versus profitability trade-offs.
  4. Analysts asked for details on the eight new SUV launches planned.

Market Trends & Consumer Behavior

  1. Questions focused on the growth and sustainability of festive season sales.
  2. Analysts inquired about production momentum, inventory levels, and pending bookings post-festive.
  3. Queries on changes in consumer profile, including first-time buyers and rural growth.
  4. Questions about the impact of GST reduction on service charges and parts sales.

Financial Highlights

  1. Analysts questioned the sustainability of small car sales momentum and its impact on gross margins.
  2. Queries were raised about the reasons for ASP improvement and the current CNG mix.
  3. Questions on the increase in depreciation and its link to new plant and model launches.
  4. Analysts sought clarification on export revenue, quarterly retail numbers, and discount per unit.

Product Composition

  1. Analysts asked if small car recovery would shift focus from SUV-centric product actions.
  2. Questions on which specific models or mix contributed to the sequential ASP improvement.
  3. Inquiries about the balance between future SUV and small car launches in the portfolio.

Strategic Considerations

  1. Analysts probed for a clear framework or guardrails for profitability margins.
  2. Questions on understanding the decoupling of ASP and gross margin.
  3. Inquiries about "white spaces" for the eight planned SUV launches given current market presence.