Maruti Suzuki India Ltd beat quarterly profit estimates and reported improved margins, as the country's largest carmaker benefited from strong demand for its passenger cars, aided by festive sales.

Profit for Maruti, which has a market share of more than 40% in the country's passenger vehicle segment, more than doubled to 23.51 billion rupees ($288.5 million) in the quarter ended Dec. 31, up from 10.11 billion rupees the previous year.

According to data, analysts expected a profit of 18.81 billion rupees on average.

After rising more than 2% in the previous week, shares of the company, which kicks off quarterly earnings for automakers, rose as much as 3.2% in afternoon trade. Maruti's results are viewed as a key indicator of private consumption in the country, with the auto sector accounting for more than 50% of the country's economic growth.

According to the Society of Indian Automobile Manufacturers, holiday demand and improved semiconductor availability drove up car sales by nearly 23% across companies last quarter.

Maruti, which is majority owned by Japan's Suzuki Motor Corp, reported that vehicle sales increased to 465,911 units in the third quarter from 430,668 units the previous year.

Compact car sales, such as the Baleno, increased nearly 17%, while sport utility vehicle sales, which include the Grand Vitara, increased nearly 23%.

Carmakers, including Maruti, suffered during the pandemic as demand fell and a shortage of chips hampered their ability to build vehicles.

A return to normalcy and some relief from the chip shortage have aided the company, which reported 363,000 pending orders, 119,000 of which were for newly launched models.

Earnings before interest, taxes, depreciation, and amortisation, or EBITDA, margins increased to 9.75 percent from 6.7 percent, aided by commodity price softening and improved price realisation, or the amount of money it received for each car sold.