Business Daily from THE HINDU group of publications
Wednesday, Aug 30, 2006
Business Daily from THE HINDU group of publications Wednesday, Aug 30, 2006 |
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Markets
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Stocks
Deeptha Rajkumar
Mumbai , Aug. 29
Speculation over when and how the Government proposes to divest its stake in Maruti Udyog Ltd has once again turned the limelight on MUL on the bourses. Even as the issue is pending evaluation with the Finance Ministry, the counter appears to have appreciated by more than 11 per cent on the BSE month on month. Industry watchers believe the company's future plans are driving interest in the stock. The stock ended 2.59 per cent higher at Rs 855.45 on the BSE. "The stock of MUL has in the last month moved in line with the index. It should outperform the index by January 2007. This will primarily be driven by the two new models to be launched by the company," said senior analyst Mr Mahantesh Sabarad of Prabhudas Liladher Pvt Ltd. Maruti is expected to launch the Swift diesel and a new model in the small car space (replacing the Maruti Zen) in the near future. Sources maintain the new car will be launched over the next 4-6 weeks. "The two new plants coming up on schedule — one an "assembly line" plant and the other an "engine cum transmission" plant (through a JV with its parent) - and with new models being introduced will propel growth in sales," Mr Mahantesh Sabarad added. MUL had announced that it would buy up the entire 30 per cent stake held by Suzuki Motor Corp in Maruti-Suzuki Automobiles India Ltd (MSAIL). The latter would then be merged with MUL, effective April 1, 2006. SMC's stake would be picked up at par (Rs 100). The merger of MSAIL with MUL would retain all the benefits of the earlier arrangement, ease concerns regarding inter-company transactions and enable management to focus on critical business operations. According to analyst Mr Ashutosh Goel of Edelweiss Securities, the new models will bring incremental sales volume. "Additionally, Maruti is to supply around one lakh vehicles per annum to Nissan from 2009 under a global arrangement with Suzuki and Nissan. This will be catered to by further ramping up the capacity of the Manesar plant," he said. Mr Sabarad said the LPG variant introduced (In Delhi, Mumbai) in Wagon R range is doing well. However, the new `face-lifted' Wagon R has contributed to around 15-16 per cent to total sales volumes over the past 6-7 months. Commenting on the prospects for Maruti vis-à-vis the industry, Mr Goel said as the only pure play car company, its medium term prospects are very good. "We expect 15 per cent CAGR growth for the industry over 3-5 years," Mr Goel added.
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