- Revenue jumped 28.7% YoY, hitting a three‑year high.
- Domestic sales set a record of 564,669 units, but EBITDA margin slipped to 11.2%.
- Stock trades near a critical 200‑day EMA support at ₹14,700, with RSI in oversold territory.
- One‑time labour‑code provision of ₹593.9 cr dents net profit.
- Technicals suggest a short‑term pullback risk despite a 51% gain over two years.
You missed the fine print on Maruti Suzuki’s latest earnings – and that could cost you.
Maruti Suzuki’s Revenue Surge: What It Means for the Indian Auto Sector
Maruti Suzuki reported ₹49,891.5 cr in revenue for Q3 FY26, a 28.7% year‑on‑year jump that eclipses its previous three‑year peak. The boost came from two distinct forces: a 2% reduction in GST that lowered the on‑road price of its models, and a festive‑season demand wave that pushed domestic deliveries to a record 564,669 units. For the broader Indian automotive landscape, this signals that price‑sensitivity remains acute; any fiscal‑policy tweak can instantly translate into double‑digit sales swings. Smaller players lacking Maruti’s distribution depth may find it harder to capture similar upside, tightening the competitive moat around the market leader.
Margin Pressure Explained: EBITDA Decline vs. Sales Growth
Despite the headline‑grabbing revenue, EBITDA rose only 10% to ₹5,572 cr, and the margin slipped from 13% to 11.2%. The primary culprit is a one‑time provision of ₹593.9 cr linked to the new labour codes, which directly reduced net profit to ₹3,794 cr. Even after adjusting for this exceptional item, the operating profitability trend shows strain. Higher input costs, tighter pricing, and a shift toward higher‑margin premium variants that have not yet scaled fully are compressing margins. Investors should watch the “adjusted EBITDA margin” metric, which strips out the provision, to gauge underlying operating health.
Technical Landscape: Near 200‑Day EMA Support and Oversold Signals
On the price chart, Maruti Suzuki sits just above the 200‑day exponential moving average (EMA) at roughly ₹14,700. The 14‑day relative strength index (RSI) has fallen into the oversold band (below 30), suggesting that a short‑term correction could be imminent if the stock fails to close above the EMA. Historically, stocks that bounce off the 200‑day EMA after an oversold reading often resume their longer‑term uptrend, but a breach can trigger a steeper decline. Traders should monitor a daily close below ₹14,700 as a potential stop‑loss trigger.
Peer Comparison: How Tata Motors and Mahindra React to the Same Trends
Tata Motors, which leans heavily on commercial vehicles, reported a modest 5% revenue rise, underscoring that its exposure to passenger‑car demand is limited. Mahindra & Mahindra, meanwhile, saw a 12% jump in SUV sales, but its EBITDA margin fell to 9%, mirroring Maruti’s profit‑compression narrative. The contrast highlights Maruti’s scale advantage in converting volume into profit, yet also reveals an industry‑wide margin squeeze as raw‑material costs climb and GST benefits wane.
Historical Lens: Past GST Cuts and Sales Spikes
When the government trimmed GST on small cars in 2020, Maruti’s domestic sales surged by 15% YoY, and its share price rallied 30% over the next six months. However, that period also saw a temporary dip in margins as dealers absorbed the price reduction. The current scenario repeats that pattern: volume gains are immediate, but profitability may lag until the price advantage permeates the supply chain.
Investor Playbook: Bull vs. Bear Cases
Bull Case: If the company can normalize the labour‑code provision and re‑engineer its cost base, the 28% revenue growth could translate into a 20% margin expansion over the next two quarters. Continued festive demand, a potential second GST reduction, and a successful rollout of higher‑margin models (e.g., the upcoming hybrid hatchback) would fuel earnings upside. In this scenario, the stock could test the ₹17,000 resistance within 6‑9 months.
Bear Case: Should input‑cost inflation persist and the GST advantage evaporate, Maruti may face a double‑digit decline in EBITDA margin. A breach of the 200‑day EMA and a sustained RSI oversold condition could trigger algorithmic selling, pushing the price toward the ₹13,000 support level. Moreover, the labour‑code provision could be a harbinger of further regulatory expenses.
Bottom line: Maruti Suzuki’s record sales are a double‑edged sword. The volume surge offers upside, but margin erosion and technical headwinds demand a disciplined, risk‑adjusted approach.