Maruti vs Divislab Q1 FY24

Maruti Suzuki reported a strong Q1 FY24 with revenue of INR 30,845 crore (+22% YoY) and PAT of INR 2,485 crore (+145% YoY), driven by higher volumes, improved realization, and cost reduction. Domestic sales grew 9.1% to 434,812 units, while exports declined. The company launched three SUVs (Fronx, Jimny, Invicto) and achieved a 20% SUV market share. CNG penetration hit a record 27% with 113,000 units sold. Management announced plans to acquire Suzuki Motor Gujarat (SMG) to integrate production and target 4 million units annual capacity by 2030-31. Pending orders stood at 355,000 vehicles. Risks include ongoing semiconductor shortages (28,000 units lost in Q1) and potential demand slowdown in small cars.

Guidance read

Acquire SMG by March 2024: Board approved acquisition of Suzuki Motor Gujarat shares from SMC, to be completed within FY24 at net book value. Target 4 million units capacity by 2030-31: Production capacity to double from current levels, with 1 million capacity at Kharkhoda and additional 1 million under study. EV launch in next financial year: EV manufacturing facility at SMG will be part of MSIL; launch expected in FY25.

Risk read

Key risks include Semiconductor shortage persists — Electronic component shortages caused 28,000 units of lost production in Q1; limited visibility on supplies.; Small car segment slowdown — Small car share declined to 32% of industry; first-time buyer ratio fell to 40% from 42-44%.; Discounts and inventory pressure — Discounts increased to INR 16,214 per vehicle from INR 12,748 YoY; dealer inventory at 125,000 units (~4 weeks)..

Promise ledger

Scorecard data is being built as historical quarters are processed.

Divis Laboratories reported a consolidated total income of INR 1,859 crore for Q1 FY24, down from INR 2,343 crore in the same quarter last year, reflecting the absence of COVID-related demand and ongoing pricing pressures in generics. PAT stood at INR 66 crore, impacted by lower sales and forex gains. Management highlighted easing raw material costs and logistics, with material consumption falling to 39% of sales. The custom synthesis segment (40% of mix) is progressing well with phase II/III projects and two large commercial projects ramping up. Contrast media and Sartans are key growth drivers, with MRI contrast media validation expected by FY24-end. Unit III greenfield project is on track with INR 1,500 crore initial investment, expected to contribute by mid-FY25. Management guided for a steady-state EBITDA margin of 35-40% and double-digit revenue growth over the medium term, excluding one-offs. Key risks include sustained pricing pressure in US/European generics and potential raw material volatility.

Guidance read

Steady-state EBITDA margin of 35-40%: Management expects EBITDA margins to stabilize in the 35-40% range over the long term, excluding COVID-related distortions. Double-digit revenue growth over medium term: Management anticipates double-digit revenue growth going forward, driven by custom synthesis, contrast media, and Sartans. Unit III greenfield project to commercialize by mid-FY25: The Unit III project in Kakinada, with an initial investment of INR 1,500 crore, is expected to start commercial production by mid-2025. MRI contrast media validation by end of FY24: Validation for some MRI contrast media products is expected to be completed by the end of the current financial year, enabling customer sampling.

Risk read

Key risks include Sustained pricing pressure in US/European generics — Management acknowledged potential impact of price pressures in US and European markets on operating margins, though they remain optimistic.; Raw material price volatility — While raw material prices are currently softening, management noted that price variations could recur, especially for solvents like acetonitrile.; Dependence on custom synthesis project ramp-up — Custom synthesis growth depends on customer approvals and project timelines, which are uncertain and not quarter-to-quarter predictable..

Promise ledger

Scorecard data is being built as historical quarters are processed.