Maurti Suzuki gains 3% to hit fresh lifetime high in a weak market

The stock of automobile major quoted higher for the fourth straight day, surging 6 per cent during the period

Shares of Maruti Suzuki India (MSIL) gained 3 per cent to hit a record high of Rs 10,046.2 on the BSE in Thursday’s intra-day trade. The stock of automobiles major quoted higher for the fourth straight day as shares surged 6 per cent during the period. It surpassed its previous high of Rs 10,036.70 touched on July 5, 2023. In comparison, the S&P BSE Sensex was down 0.11 per cent at 65,014 at 12:57 pm.

MSIL on Tuesday, August 29, announced that it has appointed Arnab Roy as the new Chief Financial Officer (CFO). Arnab will assume responsibilities starting as the CFO – Designate w.e.f. October 16, 2023 and full-time CFO of the company with effect from January 1, 2024.

"The appointment of Arnab Roy as the new CFO with his diverse and extensive experience with an impressive professional journey spanning 25 years, is a positive development for Maruti, in our view," said Himanshu Singh – Research Analyst, Prabhudas Lilladher.

Roy's vast experience and expertise in managing operations of large multinational corporations will be crucial in steering Maruti Suzuki towards a path of sustained growth and success as it seeks to strengthen its position in the evolving automotive landscape, he added.

MSIL also announced intentions to consider stock split as per shareholder’s requests and plans to invest Rs 45,000 crore ($5.4 billion) to double its annual production capacity to 4 million vehicles by 2031.

Currently, the face value of the MSIL stock is Rs 5 paid up. Usually, a stock split leads to more liquidity in the scrip as the total number of shares increase (at a reduced face value) and these become more affordable for investors.

Meanwhile, in the April-June quarter (Q1FY24), MSIL's net profit more-than-doubled to Rs 2,485 crore, against Rs 1,013 crore in a year ago quarter, on account of larger sales volume, improved realisation, cost reduction efforts and higher non-operating income.

The company had registered highest-ever quarterly net sales of Rs 30,845 crore, as against Rs 25,286 crore in Q1FY23.

During the quarter, the company continued to face electronic component shortages, particularly in models witnessing high demand. The company said it could not produce about 28,000 vehicles in Q1FY24, as the company faced electronic component shortages, particularly in models witnessing high demand. Pending customer orders stood at about 355,000 vehicles at the end of the June quarter.

With recent product launches and new-age technology offerings, the company strengthened its competitive position.

"This would increase the company's ability to attract and cater to a larger customer base particularly in the SUV segment. Accordingly, the company is better placed to achieve growth higher than the average industry growth, thus leading to an increase in market share. Semi-conductor availability, which still remains uncertain, will play a crucial role in achieving business goals," the company said.

MSIL, in its FY23 annual report, said that the company is optimistic of long-term growth potential of Indian passenger vehicle industry. For its parent, Suzuki Motor Corporation (SMC), the company is an important subsidiary. Therefore, SMC is making all efforts to strengthen the future competitiveness of the company.

"Recently, SMC unveiled growth strategy for the entire Suzuki group wherein it has committed huge investment towards decarbonisation efforts that include fortifying Maruti Suzuki’s electric vehicle line-up while simultaneously working on other carbon reduction powertrain technologies such as hybrid-electric, flex-fuel technology, Compressed bio-gas (CBG) and CNG. It has also expressed ambition to regain 50 per cent market share in Indian passenger vehicle industry along with initiatives to achieve this ambition," the management added.