Ladies and gentlemen, good day and welcome to Maruti Suzuki India Limited Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav . Thank you, and over to you, sir.
Thank you, Avirah. Ladies and gentlemen, good afternoon once again. Welcome you all to Q1 FY2026 earnings call. May I introduce you to the management team from Maruti Suzuki ? Today, we have with us Chief Investor Relations Officer Mr. Rahul Bharti and CFO Mr. Arnab Roy. Before we begin, may I remind you of the safe harbor? We may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risk that the company faces. I also like to inform you that the call is being recorded, and the audio recording and the transcript will be available at our website. P lease note that in case of any inadvertent error during this live audio call, the transcript will be provided with the corrected information.
The con call will begin with a brief statement on the performance and outlook of our business by C IR O and Senior Executive Officer Corporate Affairs, Mr. Rahul Bharti, after which you'll be happy to receive your questions. I would now like to invite our C IR O , Mr. Rahul Bharti. Over to you, sir.
Thanks, Pranav. Good afternoon, ladies and gentlemen, and thank you for joining us. Before we come to the explanation of the results, I would like to share an overview of the passenger vehicle industry's sales performance in quarter1, followed by major business highlights of the company. In quarter1 of this financial year, the domestic passenger vehicle industry continued to witness a sluggish demand environment. The wholesale in the passenger vehicle industry declined by about 1.4% in quarter1 compared to the same period previous year. The affordability issues in the entry-segment cars continued to affect the growth of the industry. In terms of form factor, the industry saw an increase in consumer preference to SUVs and MPVs. In quarter1 , the SUV share increased to over 55% of total sales, while MPVs' contribution increased to about 11%. However, the share of the hatchback segment continued to shrink.
In quarter1 of this financial year, the share has reduced to 21% from a high of 46% in the financial year 2019. In terms of powertrain mix, the share of CNG and diesel powertrains was about 19% each. The share of hybrid vehicles and EVs was about 3 and 4%, respectively. Now, I'd like to share the major business highlights for the company. The company continued to maintain a robust growth in exports in the quarter. It commanded nearly 47.1% share of India's total passenger vehicle exports in quarter 1 of this financial year. The all-new Dzire became India's first sedan to receive a five-star Bharat NCAP safety rating, while the new-age Baleno earned a commendable four-star rating, reinforcing our commitment to vehicle safety.
In terms of customer safety, the company is now offering six airbags as a standard in almost all its PV product lineup and advanced safety features like electronic stability control, anti-lock braking system with electronic brake force distribution as a standard feature across all variants of all models. In the SUV segment, the Grand Vitara set a new benchmark by becoming the fastest mid-SUV to reach 300,000 unit sales since its launch. The Fronx emerged as the fastest SUV to achieve 100,000 exports from India within just 25 months, reflecting strong global acceptance of the company's products. The Fronx is also the highest exported car from India in quarter1 of this financial year. The company celebrates 20 years of its iconic Swift. Since its launch, the Swift has evolved through four generations and continues to resonate strongly with customers, having accomplished a milestone of over 3 million customers in India.
In terms of service network, the company inaugurated its 5,500th service touchpoint, bringing the total number of service bays to about 40,000 across 2,764 cities of India. The company achieved a historic milestone in May 2025 by servicing over 2.45 million vehicles in a single month. The company continues to accelerate its efforts to enhance the share of renewable energy across its operations. You may be aware we had increased the capacity of our solar generation to 78.2 megawatts at peak. Looking ahead, the company plans to scale its solar capacity to 319 megawatts by financial year 2031. This is expected to increase the share of renewable electricity in total electricity consumption to 85% by the financial year 2031. The company also uses rail mode to lower its carbon footprint in the logistics.
The company is the first automobile OEM in India to develop in-plant railway sidings, and that too at two manufacturing facilities with a combined dispatch capacity of 750,000 vehicles per annum. These sidings are aligned with the government of India's PM Gati Shakti initiative. In financial year 2025, the company has achieved its highest-ever rail dispatch volume of 518,000 vehicles, representing 24.3% of total dispatches. We are aiming to increase the share to 35% by financial year 2031. To accelerate electric vehicle adoption, the company introduced a customized training program at 130 industrial training institutes called ITIs as part of its CSR. The first batch of over 4,000 trained students will be ready to join the automobile industry from September 2025 onwards. They are free to join either the Maruti network or any company in India.
Coming to the business performance in quarter1 of financial year 2026, during the quarter, the company sold a total of 527,861 vehicles during the quarter, comprising domestic sales of 430,889 units and exports of 96,972 units. A decline in domestic sales of 4.5% was compensated by a robust 37.4% growth in exports, resulting in an overall sales volume increase of 1.1% for the quarter year-on-year. In the domestic market, the participation of first-time buyers in car buying continued to remain subdued, largely due to affordability issues. For the sake of clarity, since. This definition has come up, first-time buyers refer to first-ever car purchase in the family, not the first-ever purchase by an individual. Given the demand situation, the company calibrated its wholesale while maximizing retail sales.
In the quarter, the demand environment in the rural market was quite better as compared to urban markets, and the early onset of monsoon has helped improve consumer sentiment in rural markets. The consumer preference towards CNG vehicles continues to increase. In quarter 1, every one in three cars sold by the company in the domestic market was a natural gas vehicle. Coming to financial results, during quarter 1 of financial year 2026, the company registered net sales of INR 366.2 billion as compared to INR 338.7 billion in the same period previous year. The net profit in the quarter was INR 37.1 billion compared to INR 36.5 billion in quarter 1 of the financial year 2025. Since investors look for a sequential comparison, I'll share. On a sequential basis, while the overall sales volume declined by 12.7%, the net sales declined at a slower pace by 5.7%, going to favorable mix.
Sequentially, the operating profit margin EBIT has come down to 8.3% of net sales compared to 8.7% in quarter 4 of financial year 2025, and it's a result of some adverse factors, some positive factors. I'll list them both. The adverse factors were the operating leverage was unfavorable by about 60 basis points. Commodity costs, largely on account of steel, were adverse by 40 basis points. Forex was adverse by 40 basis points. Employee cost was higher by 50 basis points, largely on account of seasonality. As you may be aware, the commercial production of Greenfield Plant at Karkoda, phase I, having a capacity of 250,000 units per annum, has started in quarter 4 of financial year 2025. Being a new plant, it will take a while for the production to scale up. However, the overheads and depreciation associated with new plants are getting captured in the P&L.
The hit on the margin because of this is about 30 basis points, which should go away as the utilization goes up. These adverse expenses were partially offset by a favorable mix of about 30 basis points and lower advertisement expenses of about 60 basis points. You may also be aware there was a lumpiness of about 90 basis points in Q4 of financial year 2025. Now, in quarter 1 this year, this has reversed. Additionally, it is to be noted that the benefit in terms of forex and commodity costs of about 50 basis points is accrued due to hedging gain, and because of the nature of income, this benefit is accounted in non-operating income and is not captured in the operating margin in our accounts.
I may also like to flag for our analysts that our subsidiary, Essenti, has reported an interest income on their cash of about INR 400 million at the PAT level, though this has not been accounted in our standalone PAT. That brings me to the end of the financial results, and we are now ready to take your questions, feedback, and any observations that you may have. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, please wait for a moment while the question queue assembles. The first question is from the line of Raghunandan from Nuvama Research. Please go ahead.
Thank you, sir, for the opportunity. It's not directly on net sales per unit. It has gone up 8% QOQ. It is at the highest-ever level. If you can talk about what has led to this ASP increase and whether this is sustainable, is there any one-off in that? Thank you.
There's no one-off. It's a simple function of the mix of the models of higher SUVs, lower smaller cars. That's all.
Got it, sir. The ASP commission is expected next year. How do you see the positive impact on four-wheeler demand to shape up next year? For us, what has been the contribution of government employees in sales?
It's slightly premature to estimate the benefit on account of that. We also have to keep in mind that if the income jump has to be distributed across so many shares of the, I mean, items and the share in the wallet, how much will it really help,
we still have to assess.
Is the share of government employees in our sales?
Depending upon the definition, because different people have different definitions, we can take it around mid-teens.
Thanks for that, sir. Can you please indicate the retails for Q1 and dealer inventory at the end of the quarter?
The dealer inventory is fairly in control. In fact, we have been the most conservative probably in the industry to manage it well, and we've been calibrating our wholesales to bring into account. It is just about 33 days.
Got it, sir. Just the last thing before I fall back, if you can share the discount and exports number.
It is in the range of about INR 6,500 crore overall, and discount is flattish compared to the last quarter.
Thank you, sir.
Thank you. The next question is from the line of Amyn Pirani from JP Morgan. Please go ahead.
Yes. Hi. Thanks for the opportunity, and congratulations on a strong performance despite a weak volume in this quarter. My first question is on the whole commentary around the rare earth. I just want to get your sense as to how big a problem is it for you as of now, and just your perspective on whether is it only a challenge for EVs, or can it become a challenge for the entire ICE portfolio as well? Where are we in terms of managing this risk?
Okay. It is a challenge, and of course, our engineers are working to mitigate it and ensure that we do not have impact of this. It is a work in progress, but as of now, we are managing the situation. If and when there is an impact, we'll come back to you. To answer your question, rare earth magnets are used across. The usage changes. The consumption in EVs is much higher. In ICE engines, it is much lower, but it does exist. Mostly, it is in the motor or in sensors or in some electrical parts.
Okay. Fair enough. Secondly, just on the mix, obviously, this quarter your exports have been doing well for a while now, but this quarter the gap between exports and domestics was even higher. Can you help us understand any specific color on the ASP? Is it just a basic mix, or is there some country mix or some FX benefit also which you are getting due to which this ASP has gone up?
See, overall, if you look at an overall broader perspective, it's fairly even, Steven. I mean, there's not much of a difference between domestic and export. As Rahul articulated earlier, it is pretty much the model mix which is impacting it, going towards more of the bigger cars.
Okay. Understood. Thanks for this. I'll come back if you can. Thank you.
The next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead.
Yeah. Hi. Thanks for taking my question. Just a follow-up again on the retail number for this quarter, and if you can sort of share the color between how is the growth between the rural and urban that you're seeing, and clarification that the discount number that you said is same as last quarter, you mean that is in terms of the rupee per car, that's the number that you're talking about, if you can clarify that?
The retail was about 380,000 units, and the degrowth was lesser in retail than in the wholesale. At the retail level, our degrowth was about 3.7% year-on-year, while industry degrowth was about 1.5% year-on-year. Your other question was on discount. Yes, it is flat on a rupees per car basis, flattish.
Okay. Got it. Any color on urban, like you said, degrowth? Is there any difference that you're seeing between rural and urban, that rural is doing well or is positive? Some thoughts around that.
Yeah, rural is doing better than urban, yes.
Would rural be positive?
Yes, rural is positive.
Okay. Sorry, just last clarification on this. Rural salience for us now stands at what? How much share does rural account?
We used to monitor this parameter a few years ago, but now the lines are getting hazier. Now we don't put it in hard buckets of urban and rural, but generally speaking, directionally, rural is doing better than urban.
Okay. The second question is more on the demand environment. Of course, it's been quite a soft start to the year. How should we directionally be thinking about demand heading into festive or second half of the year? We do also have a launch, by two launches that we spoke about. Are we still confident on that guidance of 2% to 3% industry and us outperforming?
In the beginning of the year, yes, the industry body had given a kind of a guess of 1% to 2% growth. Q1 has not been up to the mark. Q2 has some positives. We are waiting for the festive season. There are other positives also, like the monsoon, and rural is holding up. We are looking at Q2 and the festive season with optimism. Part of the festive season runs into Q3 also. We are hoping that it should be a better festive season than what we have seen in the financial year so far. You're right. We have two strong launches, both in the SUV space, one in electric, the other not in electric. They're both in this financial year. We have some optimism towards that.
Okay. Got it. Just last one on CAFE norms. A lot of noise has been there in the press around the conversations with the government. Now, of course, it is still to be finalized, but can you share some thought process around how we—is there an acceptance to revisit, be it small car, be it hybrid? How are the conversations around the emission norms, and when should we see better clarity on this?
See, to the extent the discussions are in SIAM, I won't be able to answer because SIAM is the best spokesperson for that. Having said that, the discussions have been proceeding well between industry and government. Both sides understand each other's position quite well. It is a complex topic, but there have been sufficient discussions, and all the complexities are on the table. It is expected that between one to two months, all of us are hoping that the final regulation will be out so that we have clarity for the power trains starting from 1st April , 2027.
Okay, got it. I'll join back. Thank you.
Thank you. The next question is from the line of Amit Hiranandani from Philip Capital. Please go ahead.
Thanks for the opportunity and congrats for the decent setup numbers. Just on the export front, we are seeing that Maruti Suzuki India Limited exports would have been much better than the peers. I just want to understand what Maruti Suzuki India Limited is doing differently versus peers. Also, how is the export market shaping up? Is there any kind of a discounting war ongoing in certain markets to gain some market share? Also, the outlook on the same place. Thanks.
Thanks for the question. A lot of efforts have gone in the full past decade at a very deep structural level for building exports. The biggest thing is the network. We have improvised the network both in quantity and in quality, in depth of penetration across markets. We've launched more products in more markets. We have carried the successes and examples of those successes from Indian marketing and Indian servicing to these foreign markets, like customer handling processes, finance at dealerships, customer complaints, reach-out efforts. All these efforts have helped. I should also say that Suzuki has been kind to make their global distributors available to us. In Q1, it is so interesting that the rest of industry, if we exclude Maruti Suzuki India Limited, there was a negative growth of 2.1%. Maruti exports grew by 37.4%, which pulled up the industry growth to 13%.
Now we are 47% of exports. It is a build-up over a long period of time, and we are spread in now about 100 countries, and we want to take it forward. A big increase will be when we launch our EV in about 100 countries of the world, including Europe and Japan. One big factor has been Japan. You may be interested to know that Japan is now, in Q1, the second largest export destination in all our portfolio, in all our global markets. Jimny and Fronx are doing exceedingly well there.
Yeah, commendable work there on the export front. My second question is basically I want to understand more on the upcoming launches and how much % would be SUVs?
Sorry to interrupt you. You had one question on discounting. No, that's not the case. We are working with very sustainable, healthy margins.
Sure. Thanks for that. Sir, how much % will be SUVs in Maruti Suzuki India Limited's upcoming launches till 2030?
Normally, auto manufacturers do not share launches so much in advance. They just share the numbers. The idea is to retain the excitement and the curiosity in the market. At least in this financial year, we'll have two SUVs. What I can share with you is, since SUVs are about 55% of the market today, obviously, they'll find a good share in our new model lineup in the next few years.
Just one last quick question on why other income was higher and the CapEx outlook for this fiscal year. Thanks.
Other income has been higher, as you can see from the results. It is predominantly driven by two things. One is definitely a more efficient treasury operation. The second part of it is the market has been supported. There was a mark-to-market impact of the overall industry yield, whether it is the, I mean, kind of a three-year reference yields or the one-year reference yields. Both have softened. As a result of that, there's a mark-to-market impact.
The CapEx outlook, please. Thanks.
Being as per plan overall. We had an outlook of about close to INR 10,000 crore for the year, and we are tracking at about the run rate. We are around 25% for the quarter one.
Wonderful. Thank you, sir.
Thank you. The next question is from the line of Vinay from Morgan Stanley. Please go ahead.
Hi, Team. Thanks for the opportunity. My question is on supply chain resilience when it comes to electric vehicles. Is there a discussion between Maruti Suzuki India Limited and the government? On one side, every company in this earnings call has come out and said that electric vehicle ramp-up outlook in the near term is uncertain. We also have CAFE norms, which are, in a way, pushing the sector towards electric. Do you think there's enough supply chain resilience to make the sector future-proof? Anything Maruti Suzuki India Limited or the government are jointly doing together to address that? That's the first question. I would love to hear your thoughts sir.
Vinay, very good question. I hope we had an equally good answer. This is a challenge. It was known. There are other questions around EVs also, like lithium availability or some other critical minerals availability. Fortunately, the government is seized of the matter, and they are taking a realistic view. The ministries are talking to each other. There is some level of understanding on this. Therefore, in CAFE norms, a multi-power train approach or a strategy is a much dearest one. We are ambitious on EVs, and we are ambitious on other clean technologies also. Supply chain resilience is not fully established, but the industry is working towards it. It may involve some cost. There are also efforts on other fronts, whether some magnets can be made elsewhere, either in India or abroad. The government is working on those kinds of efforts also.
It's the kind of uncertainty that you see in business, and you have to take those challenges in your side.
Yeah. Right. Secondly, Rahul, just on the coming festival season, like you talked about, you'll have two SUV launches coming through to that. Any thoughts of market share gain versus cannibalization? Anything you want to share about both of them? Anything different that you're trying to do so as to maximize the impact and have more market share gain in the SUV space?
I think one of our SUVs is the EV, you're aware. We have taken these steps to give the consumer a lot of confidence, particularly after sales. For example, fast charging, charging at home, 24x7 assistance, service on wheel, and everything that Maruti stands for: service, proximity, support, etc. That should increase confidence in EVs in India and increase adoption also. Your question on cannibalization, this has been a question for the past, I would say, 20 years. If you have a big portfolio and you space your models close to each other so that every space is filled, this is a kind of risk that we have handled in so many product launches in the past. Our idea is the total volume should go up.
Right, because especially with regard to the other launch, not the EV one, the other SUV, it is going to be in our platform.
We have to keep in mind that only Maruti Suzuki has this advantage in India, that we have two channels now, distribution channels. We have the Nexa, we have the Arena. We go granular in serving the customer.
Great. Great. Rahul, best wishes for the two launches.
Thank you.
Thank you. The next question is from the line of Rishi Vora from Kotak Securities. Please go ahead.
Thank you for the opportunity. Just first, on the EV launch, when are we going to export the product? Is it this month, or is it within the next two months?
We have to dispatch cars to about 100 markets of the world, including India. Some amount of tackering will take place. We'll start very soon and complete all within this financial year.
Right. It has not happened in the month of July, right?
Today is the last day of July.
Oh, you went after today.
It happened today.
Okay.
Sorry?
Understood. Yeah. Understood. Secondly, on the Grand Vitara volumes, we have seen quite a significant decline in the volumes. Is there anything you want to highlight over there, what is happening over there, and why there has been such a steep fall?
See, the product is good. The customer response is good, and the customers who have seen it swear by the product. We will be going in a sustainable manner. If there are any desperate measures in the market by some players, a company like Maruti Suzuki India Limited will not be affected too early. We will go about in a sustainable manner.
Understood. The ICE SUV launch, which will be.
I should also tell you that there is a CNG variant that has been launched very recently.
Understood. Understood. On the ICE SUV launch, which is slated for release in the coming months, will it also have a hybrid powertrain, or you'll not be commenting right now?
If I tell you now, you won't come to our launch. I want to invite you to our launch.
Understood. Just last thing, on the ASP side, will there also be some positive impact of the six airbags which you have introduced in all your models? At least during the quarter, can you give us the number of models in which you have introduced six airbags, and that will have some positive impact on the ASPs as well, right?
What I can tell you is that by end of July, which is now, almost 97% of our volume by sales would have six airbags.
Understood. By any chance, do you know the number? What would it be by end of March?
It's a transition phase, just wait for the next quarter.
Understood. Okay. Thank you. All the best.
Thank you. The next question is from the line of Kapil Singh from Vemora. Please go ahead.
Good evening, sir. Just a few numbers which I wanted. Firstly, the share sales for the quarter, if you have, the MTM gain in other income, if you can share, and the CapEx of INR 10,000 crore, does it include SMG? If not, what is SMG CapEx?
Okay. First, on the last one, I think that CapEx is MSIL. SMG is over and above it. That's the first part. MTM, there is about, as I said, that the index yield has gone by about 35 bps. There is a corresponding gain for that. What was your other question?
Share sales for the quarter?
Yes, just give me a moment. The growth is about 13%. I don't think we have the exact number right here. The growth is around 13%.
Okay. Sir, how much cash do we have, and what is the yield we have on the treasury book?
Cash you can—I mean, this is a June quarter, so we don't share the balance sheet. You can do the March, and you can see it's in the similar range. In September, you will get our balance sheet. The yield has been positive. There is an underlying yield, plus over and above that is the mark-to-market, as I have said a few times in the call. It's a combination of that. You guys have all the models to do the math.
Right. One question I had on the electric vehicle launch in the global markets, particularly Europe and Japan, since you've been doing groundwork on these markets where you're launching. Any understanding, general understanding of European and Japanese market, you could give, like what are the adoption rates for electric vehicles, how you are seeing that market progressing, and the competitive intensity in those markets as well? Any qualitative color would be helpful.
Interesting. Europe today has about 12% EV penetration, but the appetite is high. Japan has slightly lower penetration, but yes, we are confident of that market because our parent comes from that market. If we can go by their assessment of the past two models, which are the Swans and the Jimny, the experience has been positive. We are hopeful. I can also tell you that these exports will be fairly diversified. We have about 100 countries of the world. We have a sense of confidence on the sales.
Thank you, sir. Anything on the competitive intensity?
Obviously, this will not be like India, where Maruti Suzuki India Limited is a dominant player. There is a lot of appetite in the market, which we have, and with a good product, we are hoping to service.
We look forward to those wishes for the launch.
Thank you. Need your wishes.
Thank you. The next question is from the line of Pramod Amthe from InCred. Please go ahead.
Thanks. Rahul, this is with regard to the exports. As a proportion of mix, we should be moving up, and we clearly see a traction in terms of ASP. When it comes to a gross margin or to the EBITDA margin, they still are not flowing through to their end. Can you give more color in terms of exports? Are they going to fleet or more for individual customers? How is the mix?
As I mentioned, we export to about 100 countries of the world. The mix is, for example, it has a fair amount of small cuts also, and the margins, as I mentioned, sustainable. These are both individual customers, and in some markets, we have the fleet customers also. Fairly diversified and across segments, we have the Dzire as a sedan, we have SUVs, we have small and compact cars. Fairly diversified.
The second one is taking forward to the EV exports. How do you need to track from India the relative price positioning of these vehicles versus peers, or the CapEx type of norms will be a driving force for Suzuki to absorb from Maruti so that you'll be working on a fixed take-or-pay? How does this all shape up in EVs?
Sorry, could you repeat the question?
I was saying initial pricing has come through, right, in Europe, how the products are pricing. At the end of the day, do we need to see the competitive pricing of these products in those end markets and how the demand will shape up for India exports, or you feel the regulatory compliance is like CAFE, which will make Suzuki to absorb Maruti imports of EVs?
See, how they price it in their markets is their concern. Of course, since we have to export from here, we definitely need our profit. The market has an appetite for so many reasons: market pressure, peer pressure, competitive pressure, regulatory pressure, environment concerns. There is an appetite, as I mentioned, in the European market, and we are positive about it.
You will be working on quarterly targets of pushing volumes to the parent based on the demand, or how is it going to shape up as we go forward?
Like it happens in all markets, every market has a customer appetite, and there's a demand forecasting. We will be manufacturing to such forecasts and will be shipping our cars.
Okay, thank you all.
Thank you. Ladies and gentlemen, we take this as the last question for the day. On behalf of Maruti Suzuki India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.