Maruti Suzuki, India's biggest carmaker by sales, reported on Friday that net quarterly profit nearly doubled from a year ago, bucking the weakest passenger automobile market in a decade. The strong numbers for the final quarter of the 2012-13 financial year, driven by cost cuts, a weaker Japanese yen and new models, far outpaced market forecasts and propelled Maruti's share price higher by over five percent.
Profit for the three months to March surged to 12.40 billion rupees ($229 million) from 6.4 billion a year earlier on sales up 14 percent to 131 billion rupees, said Maruti, which is held 54 percent by Japan's Suzuki Motor.
"The increase in net profit during the quarter was on account of higher sales of new models such as the Ertiga, Dzire and Swift, cost reduction and localisation efforts and benefit of a favourable exchange rate," the firm said.
New Delhi-based Maruti, Suzuki Motor's biggest overseas unit, is vital to its Japanese parent's fortunes, contributing over half of its net profit.
The earnings smartly outdistanced expectations of a 7.2-billion-rupee profit and came as India's car market is going through its worst slump in 10 years that has meant unit sales of some automakers have gone into reverse.
Maruti's domestic sales climbed by 4.4 percent to 1.05 million cars in the last financial year even as industry-wide unit sales slid by 6.7 percent, hit by a sharply slowing economy and high borrowing costs that deterred buyers.
"To their credit, Maruti has stemmed its market share losses" in the fiercely competitive market, Fortune Equity Brokers' analyst Mahantesh Sabarad told AFP.
Maruti, founded in 1983, holds 39 percent of the passenger car market with its widespread service market helping it fend off rivals.
Partly behind Maruti's performance was "an improved product mix", said Arun Agarwal, auto analyst at Kotak Securities.
Maruti's Ertiga minivans and Dzire sedans have been big hits as increasingly affluent drivers shift away from the company's trademark small, inexpensive cars to bigger, costlier vehicles to navigate India's chaotic, potholed roads.
The fall in costs was helped by a near 10 percent softening of the Japanese yen against the rupee that made car parts from Japan much cheaper. Sharply better earnings from Maruti's treasury cash pile also was a big boost.
Maruti's shares closed 83.7 rupees higher at 1,673.45 rupees on the earnings, which included the impact of Maruti's merger with its engine unit Suzuki Powertrain during the last financial year.
Excluding the merger, quarterly profit jumped 80 percent to 11.5 billion rupees.
India's car sales are expected to remain sluggish for a few years. But its 1.2-billion population, small car ownership penetration and swelling paychecks still make the South Asian nation a compelling destination for international carmakers aiming to hike sales longer term, analysts say.