Keep Maruti Suzuki in portfolio: Sanju Verma

Sanju Verma, CEO at Violet Arc Global Managers told CNBC-TV18, "Like everybody else in the market, I believe Maruti Suzuki India is a great story. I think where I beg to differ from the rest of the market is that it is not just another four-wheeler play with strong fundamentals, strong cash flows and a margin expansion story, all that is a given and that is the reason the stock has gone up by more than 40 percent in the last 100 days."

She further added, "The story in Maruti is far more systemic, what will play out going forward, I am not willing to put a number at it whether Maruti will be a Rs 4,000 stock going forward or Rs 5,000 stock because putting numbers at this point of time is blasphemous. Given that the car penetration is just about 15 to every 1000 people, vis-à-vis other markets where the numbers are far higher, I think the systemic story here is very strong and I think Maruti also react to how the yen-rupee pair behaves. Don’t forget that it is not sheer coincidence that in the last one month, the rupee has appreciated almost 1.5 percent against the yen and low behold Maruti has outperformed the Nifty by almost 10 percent in standalone terms. After today’s almost 1 percent move, Maruti is up in the last one month by 10-11 percent. So I think the yen-rupee pair is also playing out very well for this company."

"My personal sense is that the 12 percent EBITDA margin should sustain going forward. The diesel deregulation should bode well for them because that will sort of even out some of the aberrations with respect to their diesel and petrol portfolio though of course the large part of their sales, almost 60 percent, still comes from the petrol platform. So I think Maruti is a classic case of a company, which has not been carried away unlike Bajaj Auto by brand cannibalisation. They have managed this whole product differentiation strategy with different products at different price points very well," Verma said.

She further said, "In the auto space, there is a very thin line between clutter and clarity. In the case of Bajaj, it was clutter. The various variants of Pulsar have done them no good. No wonder that the company’s market share in the last 18 months has fallen from more than 23 percent to barely 18 percent and the reason why I compare Maruti with Bajaj is because seemingly they are the two companies, which have been ahead of their game but somehow Bajaj has now fallen off the track and Maruti continues to be powering ahead."