Maruti Suzuki hits new high; m-cap inches closer to Rs 2 lakh crore mark

 

Maruti Ignis

Maruti Ignis

 

  Maruti Suzuki India (MSIL) has moved higher by 3.3% to Rs 6,580, also its record high on the BSE, on expectation of strong volume growth in April-June (Q1FY18) quarter, owing to marriage season demand and uptick in rural growth.

With the market capitalization (m-cap) of Rs 198,765 crore, MSIL is Rs 1,234 crore away to join Rs 2 lakh crore m-cap club.

MSIL had reported a 15.7% year on year jump in net profit for the fourth quarter (Q4FY17), to Rs 1,709 crore. Sales revenue for the fourth quarter rose 20% to Rs 18,005 crore.  The company sold 414,439 vehicles in the quarter, growing 15% over the same period a year before.

“Growth in volumes, increase in share of the company’s higher segment models, benefits due to full capacity utilization and cost reduction efforts contributed to increase in profits. This was partially offset increase in commodity prices and adverse forex movement,” MSIL said in a release.

Analysts at HDFC securities Institutional Research is positive on the MSIL and maintains ‘buy’ rating on the stock with target price of Rs 7,070.

“We remain positive on the MSIL growth story on the back of strong volume growth, led by consistent volume uptick of Ciaz, Brezza and Baleno, and success of Ignis; increasing ASP, led by an expanding portfolio in the premium segment; fresh capacity addition from the Gujarat facility; uptick in rural demand and supporting macro tailwinds like 7th Pay Commission payout, falling interest rates, urbanisation and growing middle class,” the brokerage firm said in results preview.

Over the medium term, analyst at IIFL Wealth Management expects passenger car demand to remain strong driven by under penetration in rural areas. Maruti, with new launches and deep penetration will continue to outperform the industry.

“Maruti continues to churn out volumes showcasing massive resistance in an otherwise turbulence caused in the auto space owing to government led regulatory changes. We continue to hold out assumption of MSIL being one of the steady performer and truly marching towards 2 million units sales mark by FY19,” according to IndiaNivesh Securities, which maintain ‘buy’ rating on the stock with a revised target price of Rs 7,375.