Comments
Even as minority shareholders raised concerns around Maruti Suzuki’s Gujarat plant, the company’s shares shot up 5.21 per cent on the BSE on Friday closing at ₹1,735.90, compared with the previous close of ₹1,649.90.
Market analysts said the surge in valuation could be related to the company’s performance and overall bullish sentiments in the run-up to the Lok Sabha elections. The Sensex closed at a record 21,919.79 on Friday. Maruti’s shares are up 10 per cent since Monday.
“This is more to do with the recent decision to cut excise duty. Since then, sales are going up for the company and dispatches are up,” said Puneet Gupta, Associate Director at IHS Automotive. The auto market is showing signs of recovery going by the footfalls at showrooms post the price cuts.
Analysts said Maruti’s share price could rise further as the automaker is lining up a slew of launches. According to CLSA Research, MSIL will see strong product triggers over the next two financial years, including the recently launched small car Celerio, new sedan, utility vehicles and entry into light commercial vehicles, which should boost domestic volumes.
“We also expect export growth to improve significantly starting next financial year as it executes its new export strategy. We see Maruti’s total volumes rising at a healthy 12 per cent CAGR over fiscal 2014-16,” it said.
MSIL sold 99,758 units in the domestic market in February, up 1.80 per cent, compared with 97,955 units in the same month last year.
But concerns over the Gujarat plant still remain as small investors have taken a divergent view of the company. Minority shareholders of the company were sceptical about the future of the stock following Maruti Suzuki giving way to the parent company Suzuki Motor to run the upcoming Gujarat plant, instead of operating it on its own. There were also issues related to transfer pricing as the new plant will manufacture cars, which will be sold by MSIL to the markets after being bought by it from the new company (to be named Suzuki Motor Gujarat).
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.