NEW DELHI - Maruti Udyog Ltd., India's biggest carmaker, met market expectations on Friday with a near tripling of third-quarter profits, helped by one-time gains and surging sales fueled by economic growth and low interest rates.
The results sent Maruti's shares soaring 13.5 percent to 420 rupees in a buoyant market.
Vehicle sales at Maruti, which boasts a 47 percent slice of the car market with its small low-priced cars, have been boosted by a tax cut on cars 10 months ago.
Analysts expect the automaker to gain from robust future demand in India, spurred by an improving road network and rising incomes in Asia's third-largest economy, where only four out of every 1,000 people own a car.
"Interest rates are low, replacement demand is good, consumers are upgrading from the mini Maruti 800 to bigger cars. So the outlook for Maruti is strong," said S. Ramnath, analyst at Enam Securities, who has a "buy" rating on the stock.
Maruti, owned 54.2 percent by Japan's Suzuki Motor Corp., said net profit was 1.41 billion rupees ($31 million) in the quarter to December, compared to 496.8 million a year ago.
Net revenue jumped 27 percent to 22.7 billion rupees, mirroring a 27 percent rise in vehicle sales. Other income, including investment and other non-core earnings, rose 35 percent from a year ago to 1.07 billion rupees.
A Reuters poll of 13 brokerages this month forecast net profit of 1.4 billion rupees and revenue of 23.1 billion.
A waiver of royalty payments to its parent on older models and discounts on parts imports have also boosted profits.
What will set Maruti apart from its competitors is the robust demand in semi-urban and rural markets for the Maruti 800, the country's cheapest car, Ramnath added.
STEADY RISE IN MARGINS
India's first stand-alone car company to list after a blockbuster initial public offering in June, Maruti said operating profit margin improved to 13 percent in the third quarter from 11.6 percent in the preceding three months.
"The results meet expectations, and the operating margin at 13 percent is pretty much what I expected," said Pramod Amthe at brokerage Prabhudas Lilladher, who maintains a "buy" rating on the stock. He said he may revise his full-year forecast upwards.
Rival Tata Motors, India's largest truck maker and its third-largest car maker, reported on Thursday a tripling of December quarter profits, too.
With car sales soaring, Maruti shares have more than doubled from their early July debut and are up 59 percent over the past three and a half months, outpacing a 26 percent rise in the benchmark Bombay index.
It sold 115,551 vehicles in the December quarter, up 6.5 percent from the preceding quarter. Sales in the first nine months of this fiscal year have soared 30 percent to 328,019 vehicles, matching industry sales growth of 31 percent.
Maruti, which revolutionized India's car industry with its modern technology after its entry in 1983, faces fierce competition from the Indian unit of South Korea's Hyundai Motor Co., Honda, Ford and Tata Motors.