Jan 28 (Reuters) - Maruti Suzuki, India's top carmaker, posted a lower-than-expected quarterly profit on Wednesday, hurt by a one-time charge tied to the country's new labour code and increased raw material costs.
Maruti, the first to report earnings among Indian carmakers, said sales volume, however, rose to a record high in the December quarter due to steep tax cuts that made most models more affordable and pushed the revenue to an all-time high.
Shares of the carmaker dropped to as low as 5.3% during today's session before closing 2.4% down.
The profit was affected by a one-time charge of 5.94 billion rupees tied to India's newly enacted labour codes, higher commodity costs, unfavourable foreign exchange movement and rare-earth supply issues.
The company has been forced to import larger sub-assemblies with rare-earth magnets, instead of just the magnets, leading to higher import costs, Rahul Bharti, Maruti's executive director for corporate affairs, said in a post-earnings call.
Bharti also warned that domestic steel prices were trending upwards.
The profit for the quarter rose about 4% to 37.94 billion rupees ($412.7 million), falling short of analysts' estimate of 42.61 billion rupees, according to data compiled by LSEG.
Overall costs rose 31% compared to a year before, due to a 33% spike in raw material costs, while the operational EBITDA margin slumped to 11.7% from 13.8%.
DOMESTIC SALES JUMP
Maruti's domestic sales rose 22% in the quarter, led by a 26% jump in small-car dispatches, pushing revenue higher by 29% year-on-year to 498.92 billion rupees ($5.44 billion). This beat analysts' average estimate of 495.93 billion rupees, per data compiled by LSEG.
Revenue grew at its fastest pace since the July-September quarter of 2022.
The automaker's overall sales, which include exports and sales to Toyota under a global partnership, grew nearly 18%.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Mrigank Dhaniwala and Vijay Kishore)
