Maruti Suzuki gains as foreign brokerage reiterates high conviction buy

Maruti Suzuki India rose 1.5% to Rs 3,995 at 12:13 IST on BSE on reports that a foreign brokerage reiterated its high conviction buy on the stock.

Meanwhile, the S&P BSE Sensex was up 6.71 points or 0.02% at 27,668.11.

On BSE, so far 9,260 shares were traded in the counter as against average daily volume of 28,000 shares in the past two weeks.

The stock hit a high of Rs 3,998 and a low of Rs 3,934.20 so far during the day. The stock had hit a record high of Rs 4,087 on 1 July 2015. The stock had hit a 52-week low of Rs 2,475 on 11 July 2014.

According to reports, the foreign brokerage sees multiple catalysts driving Maruti Suzuki India's strong earnings growth going forward. The brokerage expects Maruti's market share to improve to 46.7% by FY 2017 from 45% in FY 2015. The brokerage further expects an 11% export compound annual growth rate (CAGR) over FY 2015-17 with Maruti's entry into new markets and sees a 13% CAGR for total volumes.

According to the brokerage, Maruti's earnings before interest, taxation, depreciation and amortization (EBITDA) margin may improve from 13.6% in FY 2015 to 17.2% in FY 2017 on weaker yen, improving pricing power with demand revival, operating leverage benefits and soft commodity prices.

Maruti Suzuki India's net profit rose 60.5% to Rs 1284.24 crore on 12.3% growth in net sales to Rs 13272.55 crore in Q4 March 2015 over Q4 March 2014.

Japanese parent Suzuki Motor Corporation holds 56.21% stake in Maruti Suzuki India (as per the shareholding pattern as on 31 March 2015).

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