Maruti Suzuki India Limited Q3 FY23 Earnings Conference Call Insights

Key highlights from Maruti Suzuki India Limited (MARUTI) Q3 FY23 Earnings Concall

Management Update:

• [00:05:35] MARUTI said it achieved cumulative production of over 25 million units, making it the only Indian company to achieve the milestone in passenger vehicle production.

• [00:06:01] MARUTI also said that in 2022, it registered an export of over 2.6 lakh vehicles, its highest ever exports in a calendar year.

Q&A Highlights:

• [00:10:58] Kapil Singh of Nomura asked about GM improvement in terms of mix and commodity benefit. Ajay Seth CFO answered that sequentially there has been improvement in all areas, except that the sales promotion cost was higher. Mix had a positive impact as proportion of bigger cars have gone up.

• [00:11:09] Kapil Singh from Nomura also enquired if the company expects significant commodity benefits to come in. Ajay Seth CFO replied that commodity benefits is now stabilized and it comes with a quarter lag. In future, there won’t be much impact as it has been mostly factored in.

• [00:13:05] Kapil Singh with Nomura asked about demand outlook in segments. Rahul Bharti ED said the demand scenario seems to be healthy. And on urban rural, rural continues to be strong at about 44-45%.

• [00:13:17] Kapil Singh of Nomura also asked about the order book for Jimny and Fronx. Rahul Bharti ED replied that MARUTI is happy with the booking but it’s too early to give the numbers. The company believes that it will grow faster than the industry.

• [00:14:26] Pramod Kumar at UBS enquired about the avg. discounts for 3Q23, given that retails were higher than wholesale. Ajay Seth CFO answered that the avg. discount is at INR18,291, higher than 3Q22 of INR15,200 and 2Q23 discount of INR13,840.

• [00:15:21] Pramod Kumar from UBS asked about the penetration of CNG. Rahul Bharti ED replied that so far CNG penetration is fine, but MARUTI feels the prices are high due to which sales in the commercial vehicles have been impacted.

• [00:20:14] Raghunandhan NL of Emkay asked about ramp up of production, considering large order book and low stock. Rahul Bharti ED said that on production capability MARUTI has some headroom, but the bottleneck is semiconductors. Though the situation has improved there is still some uncertainty.

• [00:24:49] Gunjan Prithyani with Bank of America asked about the royalty rate and retails in 3Q23. Rahul Bharti ED answered that royalty was about 3.9% as the mix was slightly the newer models. Also, MARUTI retailed about 4.8 lakh units in the domestic market in 3Q.

• [00:25:51] Gunjan Prithyani with Bank of America asked about the timeline of market availability of Jimny and Fronx and positioning of Fronx in terms of market sizing. Rahul Bharti ED replied that timeline is early FY24. Fronx is a compact SUV and MARUTI is waiting for customer response on this.

• [00:30:33] Kumar Rakesh at BNP Paribas asked about taking SUV market leadership in FY24, if it’s possible. Rahul Bharti ED said that hatches and SUVs are different story. MARUTI added that once the supply situation improves, it’s confident of reclaiming the number one position in SUV segment also.

• [00:37:14] Pramod Amte from Incred Capital asked about strong hybrid, what type of waiting and supply chain challenges is MARUTI facing. Rahul Bharti ED answered that it’s a new product with a new technology and the company believes, due to its less carbon emission, govt. to give some support as it gives to other technologies. In terms of bookings, MARUTI has about 23-25% penetration.

• [00:44:43] Vinay Kumar of Morgan Stanley asked about the company’s total exposure on the Yen side. Ajay Seth CFO said that MARUTI’s total exposure on Yen now is close to about 100 million Yen, both direct and indirect put together. So it’s mostly Yen denominated exposure the company has.

• [00:45:27] Vinay Kumar of Morgan Stanley enquired about exports growth outlook for FY24. Rahul Bharti ED said that the traction from the market is giving good signals. The company feels it will be constrained by its supply.