Maruti Suzuki margins jump on price hikes, sees chip supply improving

BENGALURU: Shares of India’s top carmaker Maruti Suzuki surged more than 7% on Tuesday as a series of price hikes, to offset high material costs, improved margins despite a fall in third-quarter profit.

The company, which sells every second car in India, also said it sees the chip-shortage crisis improving in the current quarter which it hopes will help ramp up production to close the gap on pending orders. However, it added that may not still be enough to reach full capacity.

Maruti’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin, a key measure of profitability, was 6.7% for the quarter, above analysts’ estimate of 6.2%, according to Refinitiv IBES data.

The company’s shares rose to their highest level since September 2018. Maruti, majority owned by Japan’s Suzuki Motor Corp, posted a bigger-than-expected 48% drop in third-quarter net profit as production slowed amid the chip shortage and high raw material costs.