Maruti vs Bajajfinsv Q2 FY24

Maruti Suzuki reported a strong Q2 FY24 with record quarterly sales volume of 552,055 units, net sales of INR 35,535 crore (up 24.5% YoY), and net profit of INR 3,716 crore (up 80% YoY). The company gained 120 bps market share in PVs and achieved leadership in the SUV segment with ~23% share. Growth was driven by easing semiconductor shortages, favorable commodity prices (especially precious metals), cost reduction efforts, and a richer product mix. Management remains cautiously optimistic on demand, with festive season industry growth of ~18% so far. However, the small car segment continues to weaken due to affordability issues, and pending orders have reduced to ~250,000 units. Key risk: rising steel prices could pressure margins in H2.

Guidance read

Exports target of 750,000-800,000 units by FY2031: Management plans a threefold increase in export volumes from current levels to about 750,000-800,000 units by 2030-31. FY24 CapEx above INR 8,000 crore: Capital expenditure for the current fiscal year is expected to exceed INR 8,000 crore. Market share recovery to 50%: Management expressed commitment to gradually recover market share to the 50% mark over time.

Risk read

Key risks include Rising steel prices may pressure margins — Steel prices have started increasing, which could negatively impact gross margins in Q3 and beyond.; Small car segment weakness persists — Affordability issues continue to depress small car demand, which remains a significant portion of Maruti's portfolio.; Margin sustainability questioned by analysts — Analysts raised concerns about one-off gains and inventory adjustments boosting margins; management clarified no one-offs but acknowledged exceptional quarter with all positives aligning.; Capacity fungibility constraints — Shifting production mix towards SUVs may require investments in flexibility, potentially impacting near-term volumes and margins..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

Bajaj Finserv delivered a strong Q2 FY24 with consolidated revenue up 25% YoY to INR 26,023 crore and PAT up 24% YoY to INR 1,929 crore. Growth was driven by robust performance across subsidiaries: BAGIC reported a 95.3% combined ratio (lowest in 14 quarters) and 39% PAT growth, while BALIC saw NBV growth of 25% to INR 237 crore. BFL continued its momentum with 33% AUM growth and asset quality improvement. The AMC business launched with INR 5,235 crore AUM. Management guided for continued balanced growth, with BAGIC targeting sub-100% combined ratio despite near-term investment costs. Key risk: elevated claims volatility in government health and crop insurance segments could pressure underwriting profitability.

Guidance read

BAGIC combined ratio to be slightly above 100% for next few quarters: Due to investments in manpower and rural expansion, combined ratio may temporarily exceed 100% before normalizing. BALIC NBV growth expected to continue with product mix improvement: Management expects NBV growth to sustain as par product mix improves and new bank partnerships contribute. BFL to maintain long-term financial guidance metrics: BFL continues to deliver on AUM growth, profitability, and asset quality targets as per its stated guidance.

Risk read

Key risks include Government health business claims volatility — The Gujarat government health scheme may have higher loss ratios due to backlog claims, though 80% is reinsured.; Expense ratio normalization pressure — BAGIC's expense ratio may rise as investments in manpower and rural branches continue, impacting near-term profitability.; Competition in crop insurance and government health — Analyst raised concern about sustainability of crop and government health business given competitive pricing and tender-based nature.; BALIC VNB margin compression from product mix shift — Higher share of lower-margin products (ULIP, non-par) and investments in new channels may keep VNB margins below prior year levels..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.