General information and entertainment, not investment advice. The author is not a SEBI-registered adviser or research analyst. No recommendation, no promised returns. Markets carry risk including loss of capital. Figures may not be current. Consult a registered adviser before acting.
1. Opening Hook
FY26 was a year of two distinct halves—not because management had a plan, but because the GST slab landed mid-year like a plot twist. H1 was brutal (market down 0.4%), then H2 roared back +16.7% when the 18% bracket suddenly became affordable again. Maruti rode that tailwind harder than peers, swinging from -5.6% domestic sales in H1 to +12.3% in H2. The real kicker: first-time buyers jumped from 42% in H1 to 51% in Q4. That’s not growth—that’s the entry-level segment waking up from a three-year nap.
2. At a Glance
- Record annual sales: 2.42M units, +8.4% YoY — Volume growth finally showed up after three years of earnings flatness (TTM profit growth: 2%).
- Net profit: ₹144.4 bn, flat YoY (+1.1%) — Record sales, record revenue (+20.2%), and profit barely moved; margin pressures ate the upside whole.
- Q4 EBIT margin: 8.8%, up 70 bps sequentially — Helped by employee cost reversals (+100 bps), lower discounts (+50 bps), FX tailwind (+30 bps), and fixed-cost absorption (+50 bps). Commodities dragged -80 bps.
- Q4 PAT: ₹36 bn, -6.9% YoY — A ₹7.5 bn mark-to-market hit on surplus investments (interest rates went up, bond valuations went down) wiped out operating gains.
- Unserved backlog: ~190k orders, 130k in small cars — Supply is now the constraint. Dealer inventory lean at 12 days.
- Capacity ramp: +0.5M units/year in FY27 (Kharkhoda Phase 2 + Hansalpur 4th line) — “Virtually unheard of,” per management, though start-up costs are being hand-waved away.
- FY27 capex: ₹14,000 cr guided — Heavy lifting ahead; no explicit margin guidance given.
- Dividend: ₹140/share, highest ever — Cheerleading despite treasury MTM headwinds.
3. Management’s Key Commentary
On the GST reform and demand:
“A year of 2 distinct halves… affordability pressures, particularly in the small car segment” (H1), then “clearly led by the small car segment, particularly vehicles in the 18% GST bracket” (H2).
(The first half was so grim they needed GST to pretend the second half wasn’t just a rebound from a crater.)
“Demand was stronger than supply at year-end… ~190,000 customer orders unserved; we’re trying to service them fast.”
(193k unserved orders is not a flex; it’s a confessions that production lines haven’t caught up.)
On capacity and the ramp:
“Kharkhoda Phase 2 and Gujarat 4th line both to be operational within FY27… each adds 250,000 units/year… ~0.5 million units/year in one year, which is virtually unheard of.”
(When management reaches for “virtually unheard of,” they’re really saying: “This is ambitious. Execution risk is real, but we’re committed.”)
“Start-up costs: CFO expects no significant drag, as ‘economies of scale should be able to broadly take care of the start-up cost,’ assuming demand remains supportive.”
(The caveat is the story. If demand cools—which it could if GST reform fades or macros tighten—those economies of scale evaporate, and start-up costs become a margin anvil.)
On exports and geopolitical uncertainty:
“If you can help me predict the war, I can predict the export number… aiming for ‘at least the last year numbers.'”
(FY26 exports hit 447k units, Q4 at record 137k. Management just said: We’re as blind as you are. Don’t ask.)
“Supply issues in rare earth metals… West Asia conflict affecting energy, certain raw materials and logistics.”
(This is the polite version of supply-chain chaos. The unpolite version: costs are lumpy, and we don’t know when it ends.)
On EVs and ASPs:
“First fully electric SUV developed on a fresh dedicated platform for India and about 100 global markets… initial response has been quite encouraging.”
(e VITARA launched; volumes are currently production-constrained. Translation: interesting but negligible in near term.)
“EVs have to increase in the future. So that will help ASPs.”
(The only growth lever management is comfortable publicly naming. Volumes are small, but margins might improve if mix shifts.)
