Maruti Suzuki share price tumbles 3% amid this development, brokerages divided on stock

On the back of disappointing first-quarter numbers, India’s largest carmaker — Maruti Suzuki shares on Thursday slumped nearly 3 per cent to Rs 6,965 on the BSE intraday trade. The counter has declined over 4 per cent in the past two trading sessions from Rs 7241 per share. 

The company’s profit declined 62 per cent to Rs 441 crore on a sequential basis, while it has posted a loss of Rs 249 crore in the year-ago quarter, while the operating income declined 26 per cent quarter-on-quarter to Rs 17,771 crore in Q1FY22, due to a 28 per cent volume decline to 3.53 lakh units. 

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The profit for Q1FY22 was primarily impacted due to lower sale volumes, as the commodity prices increased steeply but the company continued to make efforts to reduce costs, Maruti said in statement.

"The second wave of the pandemic adversely impacted Q1 production and sales. All parameters this quarter were substantially better than Q1 of FY2020-21 (Q1FY21), a comparison is not meaningful because Q1 last year had a much higher degree of disruption due to the pandemic. Sales in Q1 remain far below the previous high in Q1 of FY2018-19 (Q1FY19)," the company said.

Bernstein maintains Outperform rating on Maruti as management indicates a recovery in overall demand. The brokerage says, commodity prices continue an uptrend and are not fully offset by price increase in recent months. It sets a price target of Rs 7850 per share on the stock.

While Kotak Institutional Equities maintains SELL call, mentioning that Maruti’s Q1 EBITDA is 5 per cent below our expectations due to higher input costs and employee expenses. It points out that the volume growth outlook remains strong given the huge order backlog. It cuts a target of Rs 6000 per share. 

At around 01:00 pm, the counter is trading near 2 per cent lower to Rs 7017 per share on the BSE, as compared to a 0.45 per cent rise in the S&P BSE Sensex.