Maruti Suzuki slips 3%, hits over 5-month low

Shares of Maruti Suzuki India (MSIL) hit an over five-month low of Rs 8,290.20, on falling 3 per cent on the BSE in Wednesday’s intra-day trade. At 02:47 PM, the stock traded 2 per cent lower at Rs 8,346, and was one of the top loser among the S&P BSE Sensex. The benchmark index was down 0.67 per cent at 61,287.

Currently, Maruti trades at its lowest level since June 24, 2022. In the past three months, the stock has shed 10 per cent, as compared to 3 per cent rise in the S&P BSE Sensex. Further, in the past six months, the stock has gained 7 per cent, as against 17 per cent rally in the benchmark index. It has corrected 15 per cent from its 52-week high of Rs 9,769, touched on October 31.

On December 18, the Goods and Services Tax (GST) Council announced a single definition for sports utility vehicles (SUVs) across all states. All the cars with engine capacity of over 1500 cc, length exceeding 4000 mm and ground clearance of 170 mm attract a GST of 28 per cent and a 22 per cent cess. It takes the effective tax rate to 50 per cent.

The taxes on motor vehicles in India have historically been among the highest in the world and need to be rationalised, MSIL Chairman RC Bhargava said at an event on Monday. However, the taxes must not be the same for different car sizes, he noted.

The taxes, however, should not be the same for different types of cars as the "regulatory burn" on small cars is higher than on bigger cars in India. It is changing the pattern of demand in India with more people buying bigger cars, he added CLICK HERE FOR FULL REPORT

MSIL is India’s largest PV car company accounting for around 45 per cent of the domestic car market. The company is the undisputed leader in the mini and compact car segments in India and offers a full range of cars – entrylevel, compact cars, and SUVs. MSIL’s market share in passenger cars stands at 62 per cent, utility vehicles (UV) at 25 per cent, and vans at 90 per cent.

MSIL has a stronghold in small and mid-size segments with over 50 per cent market share and high success rates of its new launches. The company’s brand positioning as a value-for-money product company is likely to remain intact due to its products’ best fuel efficiency and lower maintenance cost. The brokerage firm Sharekhan expects MSIL to be the beneficiary of rising rural demand, driven by its reach and low maintenance service costs.

However, MSIL has a weak SUV portfolio and can restrict growth once urban demand comes back strongly. However, we are more positive about rural demand and believe MSIL to be the main beneficiary, the brokerage firm said in Q2 result update.

The rise in input prices may impact margins, if rising commodity prices could not be passed on to customers. In a scenario of price competition, MSIL’s margin may get impacted negatively. Any significant delay in the improvement of chips shortage could affect our volume estimates are among key risks, it added.