Japan’s yen hits 34-year low: Check out the three Indian stocks that stand to benefit

Japan's yen hits 34-year low: The weakness in Japan’s currency, the yen, which hit its 34-year low in Wednesday’s session (March 27), is said to bode well for three Indian auto and auto ancillary companies, namely Maruti Suzuki, Lumax Industries, and JTEKT India.

During the session, the yen traded at 151.97 per dollar, down about 0.2 per cent as per a Reuters report, tumbling to its lowest level since 1990. 

After the yen slipped to its 34-year low against the greenback, Japan's finance minister issued a warning stating that authorities could take "decisive steps” to curb the currency’s weakness.

According to Zee Business Research Desk, auto major Maruti Suzuki in the fiscal year 2021 gave 3.6 per cent of the net total income as royalty to its parent entity, Suzuki Motor Corporation (Japan). Furthermore, the value of imports in yen also accounts for 7-8 per cent of the annual income. Hence, the yen's steep fall will be positive for the Indian auto giant.

Amid the development, shares of Maruti Suzuki advanced to their fresh 52-week high of Rs 12,724.95 during intra-day trade, surpassing Rs 4 lakh crore in market capitalisation.

Lumax Industries, for many years now, has shared a financial and technical collaboration with the Japan-based Stanley Electric Company, which excels in the area of automobile illumination products and lighting. In the fiscal year 2021, Lumax paid 1.5 per cent or 18.6 crore, of the company’s revenue to Stanley as royalty.

Another auto-ancillary firm, JTEKT India, pays its Japan-based promoter, JTEKT Corporation, in yen towards royalties, technical know-how fees, and various auto component supplies. In the fiscal year 2022, the company paid Rs 22 crore as royalty—nearly 1.4 per cent of its income—and Rs 49 crore for product imports to JTEKT Corp.

The depreciation in the yen was largely triggered after the Bank of Japan decided to end its negative interest rate policy last week.