MARUTI

Q2 FY26 Update & Strategic Outlook

Export surge, GST tailwinds, and premium pivot fuel optimism 🔹 Festive Boost & GST Impact - Q2 domestic sales declined 5% YoY due to deferred purchases ahead of GST 2.0 rollout. - GST rate on small cars reduced from 29–31% to 18%, triggering strong festive demand. - Between 22 Sept and 31 Oct, bookings hit 500,000 units vs 350,000 last year — a 43% jump. - October retail sales rose 20% YoY, led by 30% growth in small cars. 🔹 Small Car Revival & Market Dynamics - Small cars account for ~50% of Maruti’s sales; management expects sustained double-digit growth in this segment. - Despite 67% share in small cars, overall market share declined from 50% in FY19 to 41% in FY25 due to UV shift. - UVs now contribute 36% to revenue (vs 18% in FY21), reflecting Maruti’s strategic pivot. 🔹 Export Momentum & New Launches - Exports rose 42% YoY in Q2; now form 19% of total sales (up from 7%). - Q2 exports reached 1.1 lakh units; FY26 target of 4 lakh units likely to be exceeded. - Victoris SUV (5-star safety rated) received 30,000 bookings; Fronx and Jimny also performing well. 🔹 EV & Hybrid Strategy - Over 7,000 E-Vitara units exported; six new EVs planned by FY31. - Toyota’s hybrid tech and factory-fitted CNG options provide a competitive edge in the interim. - Maruti poised to benefit from any pro-hybrid government policy. 🔹 Financial Performance - Total volume growth was sub-2% YoY, but revenue rose 13% due to richer product mix. - EBITDA remained flat at ₹4,430 crore; margin contracted from 11.8% to 10.5% due to higher input and promo costs. - EBIT margin fell to 8.5%, impacted by depreciation from the new Kharkhoda plant. - Management maintains long-term EBIT margin guidance of 10%, supported by premiumization. 🔹 Outlook - Motilal Oswal projects 17.5% earnings CAGR from FY25–28, driven by new launches and export strength. - Maruti’s diversified portfolio, GST-led demand revival, and strategic shift toward UVs and EVs position it well for sustained growth.