Summary
Maruti Suzuki - Q3 FY26 Earnings Call Summary Wednesday, January 28, 2026 2:00 PM
Event Participants
Executives 3 Arnab Roy (CFO), Pranav Ambaprasad (IR), Rahul Bharti (CIRO & Senior Executive Officer, Corporate Affairs)
Analysts 7 Arvind Sharma (Citigroup), Binay Singh (Morgan Stanley), Chandramouli Muthiah (Goldman Sachs), Gunjan Prithyani (BofA), Kapil Singh (Nomura), Mumuksh Mandlesha (Anand Rathi), Pramod Amthe (InCred Capital)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Domestic Sales Volume | 684,000 units | +22% YoY; Highest-ever quarterly retail sales driven by GST reforms and small car recovery. |
| Net Sales | ₹47,500 crores | +29.1% YoY; Record quarterly high driven by volume growth and improved product mix. |
| Net Profit | ₹3,800 crores | +4.1% YoY; Impacted by a one-time ₹593.9 crore provision for New Labour Codes. |
| EBITDA Margin | 10.3% (Estimated) | Significant shift due to SMG amalgamation; benefited from +190 bps operating leverage. |
| EBIT Margin | 8.1% | -30 bps QoQ; Pressured by commodity costs (-60 bps) and labour provision (-125 bps). |
| Export Revenue | ₹8,200 crores | Robust contribution despite logistical delays in certain shipments during the quarter. |
| Order Book | 175,000 units | Healthy demand pipeline; network inventory at an all-time low of 3-4 days. |
| Capex | ₹12,000 crores | FY26 run rate inclusive of Gujarat and Kharkhoda facility expansions. |
Geographic & Segment Commentary
- Domestic Small Cars: Bounced back from a 0.4% decline in H1 to robust growth in Q3 following the GST reduction to 18%. Management noted a 7% increase in first-time buyers, indicating a strong upgrade cycle from two-wheelers.
- SUVs & Premium: The new “VICTORIS” SUV received the Indian Car of the Year award and is driving market share gains. SUV demand remains supply-constrained, with Level 2 ADAS and underbody CNG being key differentiators.
- Exports: Command a 46% share of India’s PV exports; the Jimny 5-door surpassed 100,000 cumulative exports. The e VITARA has already reached 29 countries out of a planned 100-country distribution network.
Company-Specific & Strategic Commentary
- SMG Amalgamation: Suzuki Motor Gujarat amalgamated with MSIL effective April 1, 2025; shifts SMG employee/overhead costs from “material costs” to natural heads, boosting reported EBITDA while remaining EBIT neutral.
- EV Strategy: The e VITARA (first EV) secured a 5-star Bharat NCAP rating; company aims to enable 100,000 charging points by 2030 through dealer and operator collaborations.
- Capacity Expansion: Accelerating production to meet post-GST demand; Kharkhoda Plant 2 (250k units) and Gujarat D-line (250k units) are both scheduled for commissioning in early FY27.
- Digital Financing: Maruti Suzuki Smart Finance (MSSF) crossed ₹1.7 lakh crores in cumulative disbursals since FY21, supporting 2.5 million car loans.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Export Volume | 400,000 units by FY26 | On track despite short-term logistical hurdles; broad-based across 100+ countries. |
| Industry Growth | ~7% sustainable growth | Management is cautious on sustainability after the initial “GST euphoria” and will reassess in 3 months. |
| Capacity Commissioning | +500,000 units by April/Mid-2026 | Kharkhoda Plant 2 and Gujarat D-line to address current supply constraints. |
| EV Domestic Launch | “Very soon” (H1 FY27) | Domestic launch of e VITARA to follow current export ramp-up. |
Risks & Constraints
| Risk | Context |
|---|---|
| Commodity Inflation | 60 bps impact in Q3; PGM, aluminum, and copper prices are rising. PGM content represents ~2% of net sales. |
| Rare Earth Magnets | 20 bps impact due to supply issues; company currently importing larger sub-assemblies due to magnet shortages. |
| Trade Barriers | Recent media reports of potential duty increases in South Africa and ongoing global tariff volatility. |
| Labour Costs | One-time ₹593.9 crore hit for new labour codes; management expects minimal recurring impact but monitored as a fixed cost. |
Q&A Highlights
Margin Walk & Commodities
- Question: What is the impact of PGM prices and the rare earth magnet issue? (Gunjan Prithyani)
- Answer: Current headwinds in PGM, aluminum, and copper. Rare earth impact (20 bps) was due to air-freighting larger assemblies rather than just magnets. India-based magnet manufacturing is expected to resolve this long-term (Rahul Bharti).
Demand Sustainability
- Question: Is the current 20%+ growth sustainable for FY27? (Gunjan Prithyani)
- Answer: Current demand includes postponed and preponed elements due to GST. While Q4 looks good, a careful assessment of the 7% long-term sustainable growth target will be made in 3 months (Rahul Bharti).
SMG Amalgamation Accounting
- Question: How does the SMG merger impact the P&L structure? (Chandramouli Muthiah)
- Answer: Depreciation and lease rents move to natural heads from material costs. EBITDA will be adjusted upwards, though EBIT remains neutral. Restated financials for previous years are provided for Ind AS compliance (Arnab Roy).
Pricing Strategy
- Question: Why hasn’t the company taken a price hike despite commodity pressures? (Kapil Singh)
- Answer: It is not “ethical” to raise prices immediately after a historic government GST cut. MSIL prefers to maintain momentum and pass benefits to consumers for now (Rahul Bharti).
Key Takeaway
Maruti Suzuki delivered a record-breaking Q3 FY26, with net sales reaching ₹47,500 crores and domestic volumes surging 22% following the 18% GST reform. The company achieved a historic milestone of 30 million cumulative domestic sales. While profitability was slightly dampened by a ₹593.9 crore one-time labour provision and rising commodity costs (PGM/Aluminum), operating leverage of 190 bps partially offset these pressures. Strategically, MSIL is aggressive on capacity, adding 500,000 units of annual capacity by early FY27 through the Kharkhoda and Gujarat expansions to address a 1.75 lakh unit order backlog. The export engine remains strong, particularly for the e VITARA and Jimny, though management remains watchful of global trade barriers. Looking ahead, the focus is on scaling EV infrastructure and assessing the sustainability of the domestic demand surge beyond the post-GST euphoria.
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