How do analysts view Maruti Suzuki Q3 results?

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