Maruti Suzuki India Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Gunjan Prithyani - BofA Global Research - Analyst : Yeah. Hi, team. Thanks for taking my questions. My first question is on the demand environment. I mean, you did allude to sentiment improving in quarter three during festive year-end. Could you just talk about, on the ground, what are you sensing? Is it -- fundamentally, we've seen things improve. And how should we think about the growth outlook going into fiscal '26 for the industry?

Question: Gunjan Prithyani - BofA Global Research - Analyst : And what were the actual retails in the quarter three for Maruti, I mean, if I just look at quarter three?

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay, got it. And my second question was on the margin. Thanks for providing those quarter-on-quarter changes that have happened. Just to be clear, when you say sales promotions increased by 20 basis points, was that the discounting increase quarter on quarter? Or how should I read change in discounts? Unidentified Company Representative Yeah. Pardon my mistake. So the discount for the quarter was INR30,999, so around INR31,000, which is almost similar to what was the last quarter. The last quarter was about $29,300, so not much difference in the discount.

Question: Gunjan Prithyani - BofA Global Research - Analyst : Okay, got it. And last question, just price hikes, if you can talk about, what are the price hikes we are looking to take from Feb onwards? Unidentified Company Representative So we have recently announced a price hike. It's a small one. It's just about 30 basis points on our net sales. There are inflationary pressures and all kinds of cost increases to cover. Of course, we try to minimize the impact to the market. As and when we feel the pressure that cannot be offset by cost reduction in-house, we will have to pass on to the market.

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Yeah, hi. Thanks for the questions. Quickly on the demand side, so while we are expecting about 3.5 to three kind of growth in fourth quarter, are we seeing divergent trends in rural versus urban? Many of (inaudible) in the urban markets, but rural is doing well. Is the same the case for us?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Right. That's right.

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Got it. Got it. And second question pertains to -- you talked about EV exports to be a large volume driver. So do we expect it to be our largest exported model from India given that it will be single manufacturing location for us, for Suzuki, and Toyota. Should it be a best-selling export model now? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 11:30AM, MRTI.NS - Q3 2025 Maruti Suzuki India Ltd Earnings Call

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Got it. Got it. And by when our Kharkhoda plant will start operation? It was in fourth quarter of FY25, or it's delayed?

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Got it. And lastly, what was our export revenues for the quarter? That's my last question.

Question: Jinesh Gandhi - Ambit Capital Private Limited - Analyst : Got it. Great. Thanks and all the best.

Question: Raghunandhan NL - Nuvama Wealth - Analyst : Congratulations, sir, on the e Vitara launch. Firstly, for the EV, there are a lot of features packed into it. Can you talk about the efforts in terms of ensuring optimized cost structure? And in future, how do you plan to continue the journey to bring down the costs down further?

Question: Raghunandhan NL - Nuvama Wealth - Analyst : As a continuation, how would you see EBIT per vehicle? And by when do you see EBIT per vehicle matching that of ICE? Any kind of targets you would have in terms of scale or localization to achieve a similar kind of profitability? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 11:30AM, MRTI.NS - Q3 2025 Maruti Suzuki India Ltd Earnings Call

Question: Raghunandhan NL - Nuvama Wealth - Analyst : The profitability per vehicle for an EV, when do you see it matching the data of ICE. And for some -- that to happen, what kind of skill or localization you would need to achieve?

Question: Raghunandhan NL - Nuvama Wealth - Analyst : Fair point, sir. So the first step is to focus on acceptability. And over a period of time, the cost savings will come into play. Last question --

Question: Raghunandhan NL - Nuvama Wealth - Analyst : We got it, sir. Last question, during December month hatchbacks witnessed positive growth. Your thoughts on how you see this recovery and the factors driving the recovery going forward?

Question: Raghunandhan NL - Nuvama Wealth - Analyst : Got it, sir. Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 11:30AM, MRTI.NS - Q3 2025 Maruti Suzuki India Ltd Earnings Call

Question: Binay Singh - Morgan Stanley - Analyst : Hi, team. Congratulations. Good set of earnings considering the environment we are in. Just on the electric vehicle, will you be eligible for the PLI incentive? And linked to that, the PLI incentive, as I understand, is on production, right? So it doesn't matter whether you sell in India or overseas. It'll be on production that you're doing. So could you share your thoughts on that?

Question: Binay Singh - Morgan Stanley - Analyst : That the production-linked incentive is on total volumes produced, right? So even if you are exporting it, once you qualify and you are, then you will get the PLI.

Question: Binay Singh - Morgan Stanley - Analyst : And secondly, on the CAFE norms, any update on that? Is the timeline still the same, or any read-across that you have from the government on the CAFE-III?

Question: Binay Singh - Morgan Stanley - Analyst : And lastly, just on electric vehicle, what are the next timelines to watch? Like, when is the production starting, export dispatches, domestic price announcement? Like, any sort of timelines you could share?

Question: Binay Singh - Morgan Stanley - Analyst : Great, team. Best wishes for the coming year.

Question: Pramod Amthe - InCred Capital - Analyst : Yeah, hi. Rahul, the first question is with regard to the exports. They have been on a phenomenal rise. Can you give some color in terms of what has driven it? Or is it more than market demand, or what is the effort given to achieve this? One. Second, can you give us a country mix how it has changed in nine months versus the last year?

Question: Pramod Amthe - InCred Capital - Analyst : That I understand because from January to December, you literally doubled the export volumes on a monthly basis.

Question: Pramod Amthe - InCred Capital - Analyst : Right. Congrats on that. Second one is with regard to EVs. First, in terms of buyer profile, how are you looking at it in terms of buyer profile for EVs as and when you launch it in India? And is there anything you need to do at the sales updates at NEXA to address the type of customers who will come for EVs? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 11:30AM, MRTI.NS - Q3 2025 Maruti Suzuki India Ltd Earnings Call

Question: Pramod Amthe - InCred Capital - Analyst : Sure. And just to add on to that, considering that there is more software involvement in these products, and the initial feedbacks from many of the early launches have been that handling all these software issues from the customer point of view has been a big challenge, are you taking any extra precautions to address these at your service levels?

Question: Pramod Amthe - InCred Capital - Analyst : Sure. And the last question is with regard to the November announcement which you've made about the Toyota product -- the EV product to be produced in the India plant. This is going to be -- so what has led to clinching this new product in your portfolio for production? And in terms of -- is it because of the amount of back-end work, localization done in the product? And is it going to be completely different than the existing platform, or how to look at long-term production capability of India into the EV space?

Question: Pramod Amthe - InCred Capital - Analyst : No. November, you announced that Toyota giving a further order, right, if I'm not wrong. There was a press release given out to BSE. Is it the e Vitara or the one which was also displayed in the current Bharat Expo? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 11:30AM, MRTI.NS - Q3 2025 Maruti Suzuki India Ltd Earnings Call

Question: Pramod Amthe - InCred Capital - Analyst : But it looks to be on a longer wheelbase than the existing one.

Question: Pramod Amthe - InCred Capital - Analyst : Okay, sure. Maybe I'll discuss this later on with you on that. Sure. Thanks, and all the best, Rahul.

Question: Pramod Kumar - UBS Securities - Analyst : Yeah. Thanks a lot for the opportunity, Rahul. So my first question is on the Dzire. So I just wanted to understand -- it's a model in the fourth generation, has been around forever. But the demand response -- what we pick up talking to dealers and seeing the Internet forum is that there's been a big step-up in booking numbers after the launch. So if you can just help us understand, what is the kind of -- given the data you have, what's the kind of step-up in booking velocity, what you're seeing for the new Dzire versus the outgoing Dzire? And what is the kind of -- where are the additional customers coming in from? Is it like cannibalizing existing Maruti products, or if there's a change in the profile of the buyer, what you're seeing incrementally? And also, what does it mean internally as a feedback that -- what is kind of working for the consumer? Because if it's five-star safety or features, definitely, you can do that with more models incrementally with the upgrades. And just trying to understand, is there -- the positive feedback being used internally to kind of expedite products which are more aligned with the consumer choice. So just trying to understand, what has led to that kind of sharp surge? And what can we do to capitalize on this for our other models? So that will be the first question.

Question: Pramod Kumar - UBS Securities - Analyst : Raul, just trying to understand, given the response, are we trying to kind of expedite those changes into new models because Swift is based on the same Dzire platform. So with a bit of a tweak, that can be a five-star safety product as well. And if I'm not wrong, based on the social media post, it's like the five-star safety is a big clincher for the consumer. So I'm just trying to understand how well can we use the customer response to kind of tweak our product plans? And any plans of probably a milestone in terms of more models having five-star safety, anything which you can share on that account?

Question: Pramod Kumar - UBS Securities - Analyst : Okay. Thanks a lot. And on the export side, given that the current average discount for you at a corporate level is 4%-plus -- not wrong to assume that for small cars, the discounting intensity is probably 6%, 7%, or even higher. With that level of discounting in the domestic market, is it fair to assume that export is no longer for the same model dilutive? Because we've seen with export share rising, we have not seen any negative impact as such on profitability. While historically, export used to have a lower margin, but in the current context, is it fair to assume that exports necessarily rising is probably a good thing for margins and overall profitability than a drag? Is that understanding right, sir?

Question: Pramod Kumar - UBS Securities - Analyst : On the profitability comparable, as in with domestic for our same model? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 11:30AM, MRTI.NS - Q3 2025 Maruti Suzuki India Ltd Earnings Call

Question: Pramod Kumar - UBS Securities - Analyst : And, sir, given that you said that at the end of January, end of December, the delay inventory was down to nine days, is it fair to assume that we are looking at a very robust 4Q as well in terms of dispatches and actually reasonably better dispatches than March, than the December quarter? And also, any expectations around budgets from your end? Or what are the asks from the industry body or from Maruti to the government with the budget kind of just around the corner?

Question: Pramod Kumar - UBS Securities - Analyst : On the 4Q dispatch, 4Q outlooks are on demand -- on dispatch area.

Question: Pramod Kumar - UBS Securities - Analyst : Sounds good, sir. Then thanks a lot, and wish you all the best. Thank you.

Question: Nitij Mangal - Jefferies - Analyst : Hi, good evening. Thanks for taking my question. Can you talk a little bit about demand trends in rural in terms of the mix of hatchback versus SUVs? How is that mix, let's say, in urban versus rural? And how is that changing over the years, especially on the rural side? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 29, 2025 / 11:30AM, MRTI.NS - Q3 2025 Maruti Suzuki India Ltd Earnings Call

Question: Nitij Mangal - Jefferies - Analyst : And is it possible to share any number in terms of what is the percentage of SUV in your rural sales today?

Question: Nitij Mangal - Jefferies - Analyst : Sure, thanks. And I have one more question. So we have extremely low inventories, and discounts still seem to be on the higher side. So as you now progress through the next few months and all, do you see a meaningful dip in discount levels?

Question: Nitij Mangal - Jefferies - Analyst : Okay, sure. Thank you very much.

Question: Kapil Singh - Nomura - Analyst : Hi. Good evening, sir. Firstly, on the e Vitara, I just wanted to ask if you've identified any top four or five target countries in Europe or other regions of the world that you think have got significant potential. And Suzuki was setting up a battery plant in Hansalpur, I think. So any update on that, and what will be the advantages of Maruti when it starts sourcing cells from there?

Question: Kapil Singh - Nomura - Analyst : And secondly, just on the cost outlook, if you could share more broadly for the next year? Are there any cost inflations to keep in mind for next year? And also, how do you think about the fact that there is a capacity expansion happening across many of the leading OEMs next year? Do you sense that competitive intensity could be higher next year?

Question: Kapil Singh - Nomura - Analyst : Understood. And on CAFE, just one, CAFE III basically. Just wanted to understand from -- because Maruti is doing much better than the competition, right? So when we move to CAFE III, in terms of easy penetration, what is the broad range that Maruti would need to have to meet CAFE III norms, if you have any broad calculations in mind?

Question: Kapil Singh - Nomura - Analyst : Okay, excellent. Thank you, and wish you all the best.