Good morning and welcome back to Earnings Edge right here on ADA Profit. We're not in stock of Maruti Suzuki after the company reported its quarter 4 earnings on Friday. Revenue was up 10% in this particular quarter but EBITDA was down 9%, dragging the overall margins to about 10.5%. Subsequently the net profit is also down 4% in this particular quarter. Talk more about this and much more about what's the expectation for Maruti Suzuki as well as for the auto industry in FY26. We're now joined by Mr. R.C. Bhargava, Chairman of Maruti Suzuki. Mr. Bhargava, thanks so much for joining in. I just wanted to start off first with quarter earnings and then try to get a more nuanced view for the industry from you as well. In this particular quarter, we had the revenue numbers for volumes already, but the EBITDA margin was down roughly about 9%. Could you just talk us through first on that aspect, because some other expenses were up by about 14% this quarter. You also had the Kharkhoda plant and some expenses there. If you could just let us know what led to this fall in EBITDA in this particular quarter to start us off.
The detailed financial reporting would have been done by our CFO to the analysts. But what I'd like to say is that EBITDA margins can't remain the same or grow every quarter. There are several factors which affect EBITDA margins. They include, and they have a big effect, foreign exchange rate variations in a company like Maruti. They have a big impact because we are both in the export and the domestic market and we are also importing components and materials. We have a big impact on commodity prices because lots of commodities vary depending on what is happening to the global situation. So this basic thought which I'm getting through these kind of comments is that the market expects your margins to remain the same always or to grow always. It's not a feasible proposition. A company's margins will keep varying. I think what you should look at is the trend of a company's growth and profit and margins over a longer period of time, a year, two years, and see how the company is doing. Trying to assess a company's performance every quarter is not conducive to any kind of reasonable decision making.
Fair point, Mr. Bhargava, and we have seen the kind of volatility in this particular quarter across automakers. So fair point to take margins on an annual as well as over a period of time. I also wanted to just talk about the price hike specifically. Between January and April we've seen three price hikes announced by the company. January was standard, around 3 to 4%. We saw another one in February and then another one in April. Any kind of comments that you can make in terms of prices? Is it that the commodity cost has been higher, or anything that you can quantify on this?
The April price hikes were entirely related to the extra cost of meeting the new environmental and safety regulations. There's no price increase other than that, because as a policy we have decided that we will not take any price hikes but we have to pass on to the customer. For example, all our vehicles are now being fitted with six airbags. This is a government requirement. They add to cost. We have to increase prices. If you add on six airbags, that's been one of the factors which has affected price rises.
And Mr. Bhargava, one segment that's been doing very well for you has been the export market. Now in this year we had roughly about 3.32 lakh units that was sold. Initially the target was of three lakh. So it's commendable. Now just want to understand what is the expectation for the next year specifically for exports, because we are expecting the electric vehicle to also come into play this year and our prior conversations with you as well as your team has been that it will largely be an export-oriented product at the start. So is there any quantification? Because this year you had 17% growth in exports. Any kind of expectations for FY26?
Our expectation is that exports themselves will grow by about 20% this year, and of the electric vehicles which are manufactured, the bulk of them will be exported also. They will make about 70,000 electric vehicles in this year, which commences actually, it's not a full year anyway, and the bulk of this 70,000 will get exported.
So just going by the 20% rationale, you sold about 3.3 lakh units almost this year. So just a basic calculation of 20% on that will be almost 4 lakh units. Do these four lakh units include these 70,000 units of electric vehicles?
No, all 70,000 won't get exported. But yes, it includes electric vehicle exports also.
And Mr. Bhargava, I just want to understand, because in terms of the market in general for exports has been doing very well for you in terms of Middle East and Africa as well. So that growth essentially, you are saying that will continue, the 3.3 lakh essentially over and above that, with the addition of growth, a lot of it will be driven by electric vehicles. Is that in, because electric vehicles are a very different proposition, will that be more to developed markets like Japan and others in Europe as well? If there's anything that you can tell us about that.
You're right, most of the electric vehicles will go to Europe and Japan.
And is that a new geography for you in terms of, while Japan you mentioned you entered this year again, in Europe is that something that you already sell in those markets and this is an addition, or are you going to enter new markets as well which were untapped markets?
For exports, Europe is virtually untouched at the moment.
Okay, understood sir. Now in terms of something that we've seen which is another big pivot for Maruti is the CNG cars. Over the last few years that's become roughly about six lakhs, I think was the number for FY25. Last year was six lakhs and this year we are hoping to get to about seven lakhs. And seven lakhs currently, because you also have models such as the Brezza which are offered. I think currently there are 13 to 14 models that are offered in the CNG market. So anything that you can quantify for next year, because while there's been some, from SIAM as well as others, that domestic growth is expected just 1 to 2%, growth in CNG, you are factoring in a little higher than in terms of ICE vehicles specifically. So anything that you're seeing on the ground that you can tell us in terms of small cars and CNG, do you see a buyer preference for CNG right now because of the cost-conscious buyers as well and incomes not rising as much, at least in this year?
A lot of people who buy petrol vehicles prefer to convert to CNG if CNG supply can be sorted and the vehicles of their choice is available in CNG. That's why we've been converting more and more vehicles to use CNG, and that is why the market is going up, because the network of infrastructure for distributing CNG is also increasing all the time. Government has given priority to CNG distribution, and one of the results of that is that the availability of CNG as a fuel for an automobile has become much larger.
