New launches will help Maruti do well ahead: Religare

A: There has always been an apprehension on the deal that why such a structure. Every analyst has questioned them. Although they tried to clarify that through various analyst meets, everybody still had the question, why such a structure. So, it has not gone down well with the investors and probably they want more clarifications on why such a structure from the management and that is why the letter. So, that was pretty much on cards. Wait and see how Maruti responds to this letter which has been given by various fund houses.

Latha: Will you take any stock call at the moment? Will you wait for a response and only then change your call on Maruti?

A: As far as call is concerned it is a pretty long-term thing which is going to happen; by 2020 if at all the second phase of investment comes in. As far as what we had got from the analyst meet; what Maruti has said is that all incremental phased capex will have to come from Suzuki and not from Maruti’s balance sheet. To that extent, it seems okay but why such a structure – we will wait and watch what Maruti has to respond on that.

Ekta: Is that the only downside risk that you have to your target price of Rs 1,970?

A: The stock has more of a sentiment downside risk. Having said that, the stock has already corrected from Rs 1800 to Rs 1650 levels post the results and post this announcement. So, quite a bit has started to factor in into the stock.

Latha: Let us get to the interesting report that you have written on performance of various brands that have been launched. What is in it for the listed stocks? You have written that you have seen a fair increase in the volumes of Amaze, Dzire volumes have also picked up and you say that Swift has achieved a high of 19,000 unit sales per month. Would you therefore say that in the listed space Maruti came out as winner in January; how will you interpret this from a stock market angle?

A: I think clearly was in December and they have been coming out with this product since quite some months now. However, from December month-on-month there has been improvement in Maruti’s main products. Swift and Swift Dzire are doing pretty well. Even from a broader angle, from an year-to-date (YTD) basis Maruti has not lost market share in the car segment despite having heavy competition from various other players that have come in. With the Celerio coming in, it is expected to do pretty well and they already have very good bookings in Celerio. Maruti should do well in the next one year given that they have new launches coming up in next few months, in 9-12 months coming down the line.