Maruti Suzuki Q3 net profit misses street estimates amid labour code impact; shares slip
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Maruti Suzuki India Limited (MSIL) on Wednesday reported a consolidated net profit of ₹3,879.1 crore for the quarter ended December 31, 2025, marking a modest 4.08% year-on-year (YoY) increase. While profits grew from ₹3,726.9 crore in the same period last year, the results fell short of analysts' expectations, primarily due to a one-time exceptional charge.
Record revenue driven by small car recovery
The country's largest carmaker achieved its highest-ever quarterly revenue from operations, which surged 28.7% YoY to ₹49,904.1 crore. This topline growth was fuelled by a sharp recovery in the Indian car market following GST reforms, particularly within the small car segment.
The company clocked total sales volumes of 667,769 units during the quarter, with domestic sales reaching a record high of 564,669 units. Of this domestic increase, the small car segment (in the 18% GST bracket) alone accounted for 68,328 units.
One-time provision weighs on margins
The primary drag on profitability was a one-time provision of ₹593.9 crore related to the implementation of India's new labour codes. This provision covered incremental expenses for gratuity and long-term compensated absences.
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Consequently, the operating EBITDA margin compressed to 11.2% from 13.1% in the year-ago period. Beyond the labour code impact, margins were also pressured by:
Adverse commodity prices and unfavourable foreign exchange movements.
Supply issues related to rare earth elements (REE).
Higher employee costs stemming from the revised wage definitions in the new codes.
These negative factors were partially offset by favorable operating leverage and lower sales promotion expenses.
Despite the record sales and revenue, investors reacted cautiously to the earnings miss and margin compression. Shares of Maruti Suzuki ended 2.39% lower at ₹14,880 apiece on the national stock exchange on Wednesday. In the last one year, the company's stock has risen 22% outperforming the benchmark Nifty 50 index that has risen nearly 12% during the same period.