Bharti said shaved about 3 percentage points off profitability; Maruti added that higher steel and other commodities outweighed the benefit from its price hikes. With settlement cycles now shorter, supplier bills can track commodity moves more closely, making margins less “smoothed” across quarters.
Maruti still posted profit above analysts’ expectations, helped by strong volumes, but it also flagged that output limits and rising expenses keep results sensitive to what happens next in steel and aluminum rather than a simple flip back to quarterly settlements.
Why should I care?
For markets: Maruti Suzuki’s 5.1% margin print puts supplier terms in the spotlight.
The headline isn’t only that Maruti’s operating margin fell to 5.1% in Q1 from 8.8% the prior quarter; it’s that part of the hit came from changing how quickly suppliers get compensated for commodity swings. Moving settlements from quarterly to monthly shortened the pass-through lag, which Bharti said cost 1.1 percentage points of margin in Q1.
That setup can cut both ways. When aluminum and other inputs rise, profit gets squeezed faster; when costs cool, relief can also show up faster as supplier pricing gets reset. The trade-off for investors is potentially choppier quarter-to-quarter earnings over the next few quarters, with the pace of any rebound increasingly tied to near-term commodity direction rather than management “normalizing” the settlement schedule.
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