Maruti vs Grasim 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.

Grasim's Q2 FY24 consolidated revenue grew 10% YoY to INR 30,221 crore, with EBITDA up 14% to INR 4,509 crore, driven by cement and financial services. Standalone revenue rose 4% to INR 6,442 crore, while EBITDA jumped 21% to INR 1,354 crore on higher VSF volumes (+24% YoY) and lower input costs. However, global price weakness in viscose and chloralkali persisted, and new businesses (paints, B2B e-commerce) incurred initial losses. Management guided for paints commercial launch in Q4 FY24 with three plants operational, and B2B platform Birla Pivot nearing INR 100 crore monthly run rate. Risks include sustained global demand softness in textiles and chemicals, and potential margin pressure from volatile input costs.

Guidance read

Paints commercial launch in Q4 FY24: Three plants (Panipat, Ludhiana, Cheyyar) have received consent to operate and will be operational in Q4 FY24, with product launch in the same quarter. Epoxy capacity expansion commissioning in Q3 FY24: The expanded epoxy capacity is under commissioning and expected to be operational in Q3 FY24. Renewables capacity of ~1 GW to be commissioned by Q1 FY25: Projects under implementation of about 1 GW are expected to be commissioned by next year's first quarter. Debt-to-EBITDA not to exceed ~3.5x: Even with full paints CapEx next fiscal, debt-to-EBITDA is not expected to cross about 3.5x.

Risk read

Key risks include Sustained global textile demand weakness — International brands continue to hold elevated inventories, suppressing demand for VSF and VFY; recovery timeline remains uncertain.; Volatile input costs — Caustic soda, sulfur, coal, and oil prices are volatile; recent stabilization and upticks could pressure margins.; Paints business profitability impact — Initial costs from paints business are being charged to P&L, with losses expected to persist until commercial launch and scale-up.; VFY pricing pressure from Chinese imports — Anti-dumping duty on VFY is only at DGTR recommendation stage; Chinese imports continue to pressure domestic prices due to low domestic consumption in China..

Promise ledger

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