|
| Maruti Suzuki: Speeding ahead |
| Shobhana Subramanian / Mumbai Sep 04, 2009, 00:24 IST |
|
Driven by demand for Swift and D’zire models, Maruti’s sales in the home market rose 29 per cent year-on-year in August and were way ahead of expectations. It’s possible that a fair share of the demand is emanating from urban markets. Sales from the top ten cities, which fell in 2008-09, had risen some 10 per cent in July and it’s likely the trend has sustained in August.
 With over 40 per cent of Maruti’s customers located in urban markets, a further revival in consumer sentiment in these areas can only mean more business for India’s biggest car maker. The company’s position in the compact car segment is now even stronger with the refreshed Estilo, which followed the launch of the A Star in January and the Ritz in May.
This segment, which also includes the Swift, saw sales grow over 39 per cent in August; the petrol version of the Ritz has been popular, which works well for Maruti because it qualifies as a small car and attracts a lower excise duty. The sedans, D’zire and SX4, also fared extremely well, clocking a growth of 44 per cent, albeit on a lower base. Going by the current momentum, the company should grow at least 15 per cent in the home market this year, though the management has indicated a more conservative number of 10 per cent.
The outlook for exports is also bright — in August, exports were up 156 per cent year-on-year, with the A Star doing particularly well. In the current year, the company is expected to turn in revenues of close to Rs 26,000 crore over the Rs 20,455 crore reported in 2008-09, an increase of over 25 per cent.
The combination of a better product mix, better operating leverage and lower royalty costs should result in an operating profit margin of around 11 per cent, which means the net profit could grow as much as 60 per cent over the Rs 1,219 crore posted last year. At the current price of Rs 1,507, the stock trades at 21 times estimated 2009-10 earnings.
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
