Maruti Suzuki India reverses intraday fall in choppy trade
Maruti Suzuki India rose 1.14% to Rs 1,776 at 12:41 IST on BSE, with the stock reversing intraday fall in highly volatile trade.
Meanwhile, the BSE Sensex was up 14.69 points, or 0.07%, to 21,841.11
On BSE, so far 1.55 lakh shares were traded in the counter, compared with an average volume of 95,745 shares in the past one quarter.
The stock saw high intraday volatility. It lost as much as 4.32% the day's low of Rs 1,680 so far during the day. It rose as much as 1.94% at the day's high of Rs 1,790 so far during the day. The scrip hit a 52-week high of Rs 1,864 on 9 January 2014. The stock hit a 52-week low of Rs 1,217 on 28 August 2013.
The stock had underperformed the market over the past one month till 11 March 2013, rising 4.82% compared with the Sensex's 7.18% rise. The scrip also underperformed the market in past one quarter, gaining 0.23% as against Sensex's 3.09% rise.
The large-cap company has an equity capital of Rs 151.04 crore. Face value per share is Rs 5.
As per reports, a group of investors of Maruti Suzuki India (MSIL) has ratcheted up pressure on India's top carmaker to abandon a plan for its Japanese parent to build a new plant to make cars for the Indian firm, saying it would hurt shareholders.
Suzuki Motor Co in January 2014 announced plans to invest $488 million on a new plant in India and shelved an earlier plan for Maruti to set up the factory itself. A group of 16 big fund managers said in a letter to Maruti management, dated March 5, that the plan would shift manufacturing activity away from the Indian company and turn it into a "shell company" of its parent, report added.
"The decision of the MSIL board is ill-conceived in its entirety and results in outsourcing of the core manufacturing activity that is fundamental and critical for MSIL," the letter said, referring to Maruti Suzuki. "This clearly is not in the best interest of MSIL and its shareholders and is in fact significantly detrimental to them," the investors said, in a rare case of shareholder activism in India.
A smaller group of shareholders sent a previous letter last month, saying they were concerned that the contract for the plant in Gujarat state meant the Japanese carmaker, rather than Maruti, would reap the benefits of rising domestic sales. Under the plan, Maruti will buy vehicles produced by Suzuki at the new plant and sell them in the open market. Maruti currently produces and sells its own cars.
Maruti will continue to produce cars at its existing factories in Manesar and Gurgaon in north India, which have a capacity of 1.5 million vehicles per year, but incremental production would be sourced from the Suzuki plant. The second letter was signed by HDFC Asset Management, DSP BlackRock Investment Managers, Axis Asset Management and Birla Sun Life Mutual Fund, among others, report said.
MSIL's total sales declined 0.4% to 1.09 lakh units in February 2014 over February 2013. Domestic sales rose 1.8% to 99,758 units in February 2014 over February 2013. Exports dropped 19.5% to 9,346 units in February 2014 over February 2013.
MSIL's net profit rose 35.9% to Rs 681.10 crore on 3.1% decline in net sales to Rs 10619.70 crore in Q3 December 2013 over Q3 December 2012.
Japanese parent Suzuki Motor Corporation (SMC) holds 56.21% stake in Maruti Suzuki India (as per the shareholding pattern as on 31 December 2013).
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