Demand Outlook And Margin Performance On Radar For Maruti Suzuki Investors

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Shares of Maruti Suzuki India opened on a weak note on Friday, ahead of its quarterly earnings due later today. At 0940 IST, the auto major’s stock was trading 0.2 percent lower at Rs 7,875.05 on BSE.

Even as the stock opened slightly above the flatline, it gradually gave up initial gains and touched an intraday low at Rs 7,862 on BSE. The stock has traded in a narrow range of Rs 77.15 today. (Source: BSE)

Meanwhile, the automaker could post a Rs 26,826 crore revenue for the quarter under review. This is in light of the management being able to pass on all the raw material price hikes to the consumer because of its sheer market share.

A cumulative 10.1 percent price hike was undertaken in the past six months, and more hikes could be taken to cover the full raw material hike expense.

Domestic brokerage firm Sharekhan had said that the automobile companies are expected to post a muted performance for the quarter with earnings staging a decline on a YoY basis.

The brokerage firm added that volumes are expected to marginally improve sequentially, followed by price hikes undertaken across segments to partially offset cost pressures.

Operational performance might get marred on account of soaring raw material prices and elevated cost pressures that would drag down net profits of automobile companies, the brokerage firm pointed out.

The brokerage firm believes that marriage season and positive rural sentiments would drive growth in the two-wheeler and passenger vehicle segments during April 2022. Sharekhan sees Maruti Suzuki India continuing to deliver export volumes near peak levels.

Meanwhile, the company has been bullish about demand as it believes the chip shortage issue has eased and new product launches and upgrades could drive growth in future.