The COVID-19 pandemic has worsened problems for Indian carmakers, which were already dealing with tepid demand and an inventory pile-up, though there have been signs of a slow pick-up in car sales as more customers bought vehicles during the festive season. Rising costs of raw materials, including steel and rubber, however, pose a threat to a recovery.

Maruti, which plans to raise prices on some of its models, said cost of materials at the company rose 31.3% to 110.43 billion rupees ($1.51 billion) in the third quarter ended Dec. 31, 2020.

Analysts looked beyond the better-than-expected 24% jump in third-quarter profit, with some saying EBITDA margins came in lower than their estimates.

The EBITDA margins stood at about 9.5% in the third quarter, down from 10.15% in the year-ago period, according to a Reuters calculation.

Analysts at Reliance Securities were expecting EBITDA margins to come in at 10.8%.

"Maruti has reported subdued quarterly performance due to a sharp jump in commodity costs," the brokerage's analyst Mitul Shah said.

"However, we expect the domestic passenger vehicle industry to record double-digit volume growth in the financial year 2022 that would support Maruti's business," the analyst added, while retaining his "buy" rating on the company's stock.

Net profit for Maruti, which sells every second car in India, stood at 19.41 billion rupees for the three months ended Dec. 31, compared with a profit of 15.65 billion rupees last year. The third-quarterly numbers came in higher than analysts' estimate of a profit of 18.79 billion upees, according to Refinitiv data.

Demand for small cars rose during the December quarter, which included the festive season during which Indians make large purchases.

Domestic unit sales of Maruti rose https://www.bseindia.com/xml-data/corpfiling/AttachLive/7e0eac5e-4341-46c8-9402-4fbe608acabb.pdf 13.4% on-year to 495,897 vehicles.

Revenue from operations rose 13.3% to 234.58 billion rupees.

($1 = 73.1023 Indian rupees)

(Reporting by Chandini Monnappa in Bengaluru, Editing by Sherry Jacob-Phillips)

By Chandini Monnappa