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Maruti Suzuki India’s stock rose 5% to ₹13,512 on Wednesday as investors prioritised the company's strong operating performance in the March quarter (Q4FY26) over a 7% year-on-year drop in net profit to ₹3,591 crore.
It should be noted that Maruti’s Q4FY26 profitability per vehicle held up well despite the pressure from higher raw material costs, particularly steel. Ebitda per vehicle fell just 1.4% sequentially to ₹91,050 as the average selling price (ASP) rose 4% quarter-on-quarter to ₹7.76 lakh per unit.
On the other hand, Q4FY26 domestic sales volumes announced at the start of April were disappointing. Q4 had been the best quarter for domestic volumes in FY24 and FY25. But Maruti’s Q4FY26 volume, at 539,000 units, was about 5% lower than Q3FY26. According to management, the West Asia war has so far had a minimal impact on Maruti’s car production and customer demand.
It is possible that some production capacity was shifted to prioritize export orders, a segment that saw explosive growth in Q4FY26. Export volumes surged 33% sequentially and 61% year-on-year to 137,000 units, though a part of this spike resulted from shipping delays in the previous quarter due to procedural and logistical hurdles.
Q4FY26 revenue growth was strong at 28% year-on-year to ₹52,450 crore, led by 12% and 16% growth in volume and ASP, respectively. Ebitda growth was healthy at 27% year-on-year to ₹6,157 crore with margin dipping by 10 basis points. The Ebitda-level gains were offset by a drastic 67% year-on-year fall in other income to ₹500 crore and a 20% rise in depreciation. A mark-to-market loss worth ₹750 crore owing to the rise in bond yields hit other income, hurting net profitability.
In the earnings call, management disclosed that the two new production lines at Kharkhoda, Haryana and Hansalpur, Gujarat would add a total fresh capacity of 500,000 units a year. Maruti’s capital expenditure for FY27 is expected to be ₹14,000 crore. These capacities are likely to be operational for about six months in FY27, translating into incremental production capacity of about 250,000 vehicles in FY27. Based on this additional capacity, management has guided for 10% sales volume growth in FY27, from 2.4 million units in FY26.
Volumes could get a boost from the continued benefits of the GST cuts, strong order backlog of 190,000 units, and a healthy pipeline of new launches. Besides, a gradual expansion of E-Vitara’s footprint to more than 100 markets, coupled with established brands such as Jimny and Fronx, should keep exports growth healthy.
Management’s proactive steps to expand capacity augurs well for long-term growth as Maruti is already operating at full capacity. The other factor that has turned in favour of investors is the steep fall in the stock price. It is still almost 20% down after hitting an all-time high of ₹17,370 on 5 January, a far steeper drop than the Nifty Auto index’s 10% decline.
Valuations are now relatively lower, with the stock trading at an EV/Ebitda multiple of 17 based on Bloomberg consensus estimates for FY27. For comparison, Hyundai Motor trades at an EV/Ebitda of 14.
Manish Joshi is a chartered accountant (passed in first attempt) with experience of capital markets spanning equities, derivatives, investment banking and private equity in various roles ranging from analyst to fund manager/trader. Previously, he worked with BNP Paribas, Karvy Stock Broking and The Financial Express. This rich experience has further helped him improve analytical skills and understanding of various businesses. At Mint, he writes on topics across sectors.Over the last two years of his association with Mint, he has focused on sharing his knowledge accumulated over the years with the readers. Having deep knowledge of accounting standards by virtue of the highest qualification in accounting, he can evaluate corporate balance sheets better. He tries to give a differentiated perspective on valuation of stocks and corporate developments backed by sound logic.His goal is to provide a unique value proposition to readers by blending fundamental views on a stock with shifting market dynamics, which is possible because he is an active trader himself. His columns are useful for investors and students who are pursuing management courses by demystifying complex concepts and analytical jargon. His mantra is to give maximum value for the money and time spent by the reader.