UPDATE 1-India Maruti Q1 net up 25 pct, sees sustained growth

* Net profit rises unexpectedly, sees growth being maintained

* Higher-end models and A-Star exports drove growth

* Sees operating margin improving on lower commodity prices

By Janaki Krishnan

MUMBAI, July 23 (Reuters) - Maruti Suzuki (MRTI.BO), India's top carmaker, rode export demand, higher prices, new models and lower raw material costs to an unexpected 25 percent increase in June quarter net profit, and said it hope to maintain the growth.

The strong profit growth from Maruti, 54.2 percent owned by Japan's Suzuki Motor Corp (7269.T), surprised the market which had been expecting a small fall in profit, and propelled its shares up as much as 7.3 percent to a record high.

"During the quarter the company achieved strong volume growth in the domestic as well as export markets," Maruti said.

It said new models and tapping new customer segments helped it raise market share, and net profit was helped by an easing of raw material prices and favourable foreign exchange movements.

The hatchback A-Star, which the company launched last November, found good demand in Europe, helped by government incentives there to scrap older vehicles. The company exported 45,000 A-Stars in the first six months of 2009.

Maruti's sales rose 18 percent from a year earlier to 226,729 in the June quarter, its fiscal first quarter, faster than the industry's 3.8 percent growth in passenger vehicles.

"The results were beyond our expectations. They have benefited by customers' preference for premium models," said Prayesh Jain, auto analyst with India Infoline.

Maruti sells around one in every two cars in India, and its models include the best-selling Alto and the recently launched Ritz hatchback.

The company told analysts it hoped to maintain its growth, and expected an improvement in operating margins towards the third quarter of the fiscal year.

India and China are leading a recovery in auto sales, even as auto firms elsewhere still struggle to get cars onto roads.

Maruti's net profit in the June quarter rose to 5.84 billion rupees ($120.4 million) from 4.66 billion rupees a year earlier.

That compared with a forecast of 4.49 billion rupees in a Reuters poll of 14 brokerages. [ID:nBOM491518]

Booming automobile sales in India hit a speed bump from mid-2008 as a credit crunch, high financing costs and an economic slowdown hit demand.

Aggressive rate cuts by the central bank and stimulus steps by the government, including cuts in factory-gate duties, saw customers return in early 2009 and sales momentum has increased.

Maruti shares ended up 6.4 percent at a record high close of 1,298.30 rupees, just off a lifetime high of 1,305.50 in trade, outperforming a 2.6 percent rise in the main index .BSESN.

Shares in Maruti, valued at $7.4 billion, rose 37.5 percent in the June quarter, lagging a 49 percent rise in the main index and the auto sector index's .BSEAUT 49 percent gain. ($1=48.5 rupees) (Editing by John Mair)