How do analysts view Maruti Suzuki Q3 results?

47558 Investors following Maruti Suzuki. Share this News with them.

0

Like this story, share it with millions of investors on M3

How do analysts view Maruti Suzuki Q3 results?

Maruti Suzuki shares fell over 2% on Tuesday after several analysts reduced their fiscal 2012 estimates and maintained reduce or similar ratings for India's largest passenger car maker, citing disappointing results for the third quarter and continued demand and margin pressures in the near term.

Post your opinion here

 

0

Tweet

Share on Tumblr

ALSO READ News and Notices about Maruti Suzuki See interviews with Maruti Suzuki Management See what other Experts & Brokerages are saying about Maruti Suzuki See previous Results of Maruti Suzuki

Moneycontrol Bureau

Maruti Suzuki shares fell over 2% on Tuesday after several analysts reduced their fiscal 2012 estimates and maintained reduce or similar ratings for India's largest passenger car maker, citing disappointing results for the third quarter and continued demand and margin pressures in the near term.

The stock had surged over 5% post the earnings announcement on Monday. The stock has run up over 23% this month, which also some analysts said was unwarranted.

Maruti Suzuki's net profit for the third quarter plunged 64% from a year ago to Rs 205.62 crore, as sharp depreciation in the rupee increased cost of imports, and sales declined due to overall slowdown and the strike at its plant in Manesar.

Maruti Suzuki reported net sales of Rs 7,663.64 crore, down 17.4% year-on-year in October-December. During the three-month period, it sold 211,803 units in the domestic market, down 29.2% from a year ago. Its exports were down 11% to 27,725 units.

Here's a look at what analysts feel about Maruti Suzuki's results and the outlook going ahead.

Asian Markets Securities: Low base effect, richer product mix will surely assist Maruti in posting a strong year-on-year recovery, probably even outgrowing industry (in FY13). Broad macro-economic indicators continue to be negative. Though the interest rates are peaking out, positive impact of the same will take time to translate into stronger sales volume particularly in the entry level segment for Maruti. Besides, raw material cost pressures remain along with intensifying competition. Rating: Sell. Target: Rs 1,022.

Edelweiss: Maruti's Q3 earnings indicate bottoming of margins. With competition peaking, new launches should provide the much needed sales momentum. The management is likely to shift focus to margins, which should improve from here on driven by better product mix, localization, operating leverage and lower discounts. Hedging of vendors' forex exposure should also lower volatility in earnings. Rating: Upgrade to Buy from Reduce. Target: Rs 1,350.

Emkay Global: We lower our volume estimates by 7%/9% in FY12/13 due to the skewed demand scenario and weak consumer sentiment...We lower our FY12 EBITDA margin estimates by 30bps to 7.4% due to lower volumes and adverse currency. We continue to have concerns with unhedged currency exposure in FY13. Rating: Reduce. Target: Rs 1,050.

HSBC Securities: We continue to believe Maruti is unlikely to lose significant market share in FY13 and new launches and servicing credibility would derive growth in FY13/14... We expect margins to improve gradually from the lows of 5.4% in Q3...The stock could remain range-bound near-term, looking for more visibility on FY13 sales growth. Rating: Overweight. Target: Rs 1,200.

IDBI Capital: Though we subscribe to the view that Q3 would be the trough for Maruti Suzuki, we are not as optimistic on the demand outlook in the coming months. Even the management during the call sounded unclear as to its demand expectations and seems to be adopting a wait-n-watch approach. Rating: Reduce. Target: Rs 1,093.

Quant: After including domestic passenger vehicle volume growth of 24% year-on-year in FY13 versus expected industry growth of 10%, we expect Maruti Suzuki to regain market share to 42-43% levels from the current 38%. We expect the initiation of supply of diesel engines by Fiat from February to be the point of inflexion for Maruti in the next growth cycle. Rating: Accumulate. Target: Rs 1,203.

Kotak Securities: Going into FY13, despite poor outlook on demand for petrol cars, we expect Maruti volumes to grow by 19.3% on account of increased availability of diesel engines, new product launches and poor FY12 base. However, adverse currency rates is expected to keep the operating margin under pressure in the near to medium term and margins are expected to remain well below the historical levels. Rating: Reduce. Target: Rs 1,142.

At 11:45 hrs, Maruti Suzuki shares were down 1.7% at Rs 1,141.40 on NSE.