Maruti falls; Morgan Stanley says S-Cross price cut may hit PAT

Moneycontrol  Bureau Shares of Maruti Suzuki India fell over 1 percent intraday on Tuesday. The auto maker has slashed price of its premium crossover S-Cross by over Rs 2 lakh after failing to gain traction in the market. The company had introduced the S-Cross in two options of 1.6 litre and 1.3 litre engines last year coinciding with the launch of its premium retail outlet chain Nexa. However, sales of the vehicle were hindered by pricing issues.

As per the latest price list on the company's website, the slashing of price is also applicable on the 1.3 litre variant. The cut in the price of 1.6 litre variant is Rs 2,05,000 for all the three trims, while that of 1.3 litre variant ranges from Rs 40,000 to Rs 66,000.

According to Morgan Stanley, S-Cross accounted for 2.7 percent of Q2FY16 sales. It feels that price cuts could lead to EBITDA  hit of 3.5 percent and may lead to profit hit of 4.5 percent. The brokerage is overweight on Maruti but it remains low in pecking order.

However, few days back the country's largest car manufacturer had claimed to receive good response for new cars at its Nexa showrooms. The company sells only S-Cross and Baleno through its Nexa outlets. It launched S-Cross in August and Baleno in October 2015.