Maruti Suzuki dips 2% after Deutsche Bank cuts price target

Deutsche said market share decline could trigger further de-rating and margin is likely to remain under pressure

Published: Jun 12, 2019
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Maruti Suzuki India shares fell 1.6 percent intraday on June 12 after global brokerage house Deutsche Bank maintains its 'hold' rating but slashed price target to Rs 6,325 (from Rs 6,450 earlier), implying 9 percent potential downside from current levels.

At 1101 hours IST, it was quoting at Rs 6,875.60, down Rs 97.40, or 1.40 percent on the BSE.

"Market share decline could trigger further de-rating and margin is likely to remain under pressure," Deutsche said.

The brokerage further said the company's model cycle looks to have peaked and the competition is getting its act together.

"Utilisation levels could reduce to below 90 percent. We forecast EPS CAGR for FY19-21 at 7 percent," it added.

Meanwhile, the country's largest car maker cut its vehicle production by over 18 percent in May, which is its fourth consecutive month of taking a production cut.

Maruti had cut production by around 10 percent across its factories in April. In March, the company had reported a production cut of 20.9 percent across its factories. In February, the company had cut production by over 8 percent to 1,48,959 units from 1,62,524 units produced in the year-ago month.

Auto manufacturers have been facing muted sales growth for several months now, especially after the liquidity crisis in September. Hence, these companies started adjusting their production schedules to market demand.

Maruti had reported a 22 percent decline in sales at 1,34,641 units in May. Its domestic sales fell 23.1 percent to 1,25,552 units compared to year-ago period.

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