Volume gains to offset margin pressures for Maruti Suzuki

Long waiting periods for more profitable new models and operating leverage will help the company offset higher raw material costs

The Maruti Suzuki stock has gained about 4 per cent over the past seven days on strong sales in May, expectations of higher growth in 2018-19, and plans to launch electric vehicles by 2020.

While there are headwinds such as higher raw material cost and a weak rupee, which make imports costlier, analysts say these will be offset by the operating leverage (higher volumes) and reduction in discounts as the demand in the sector improves, and a richer product mix. First, comes volume growth, both for Maruti Suzuki and the sector. After reporting single-digit growth for the past few months, the