MSIL’s top-line grew by 1% yoy to Rs. 21,459cr on the back of price hikes (up 2% yoy). Overall volume growth declined by 0.7% yoy, mainly due to weak domestic market conditions and sluggish export markets during the quarter.
Our channel checks suggest that demand in 2HCY18 was impacted by a confluence of factors like higher fuel prices, higher interest rates, insurance cost increase and the lack of major new product launches.
Maruti Suzuki India’s (MSIL’s) 3QFY19 earnings were 14% below our estimate because of weak margins on account of higher discounts, higher advertisement spending during the quarter and also higher input costs.
Competitive intensity (as indicated by the Herfindahl-Hirschman Index (HHI)) has been declining for passenger vehicles (PV’s) in India. This is due to the fact that most global OEM’s continue to struggle in India due to lack of focus and research and development on the small car segment.
For 2QFY2019, Maruti Suzuki India (MSIL) posted slightly better numbers, in-line with expectation on EBITDA margin front (after adjusting for one time engineering service fee received from Suzuki of `2bn) as well as on the bottom-line front.
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