BackMaruti Suzuki top loser on Sensex; Tata Motors hits new record high
Shares fall on doubts about the impact of Maruti's plan to source cars from a plant to be built by its parent Suzuki
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Mumbai: Maruti Suzuki India Ltd was the top loser on the Sensex with shares slumping as much as 5.3% on uncertainty of the arrangement under which the auto maker plans to procure cars from Japanese parent Suzuki Motor Corp.’s Gujarat plant. Meanwhile shares of rival Tata Motors Ltd hit a fresh high with investors churning their investments in the sector.
Responding to investors concerns over Suzuki floating a separate subsidiary to invest in Gujarat, Maruti had said on Thursday that if its contract manufacturing deal with Suzuki expires and is not extended, the holding company will transfer the Gujarat assets to Maruti at an appropriate valuation.
“If the contract manufacturing agreement expires, and in case is not extended by mutual consent, the assets of the Gujarat subsidiary would be transferred to Maruti at a fair value to be determined by independent valuation," the company had said in a statement.
The Suzuki’s subsidiary in Gujarat would operate on the basis that while it would not make any losses, it would also not accumulate any cash surpluses.
“The Maruti stock may not see much respite as the Street speculates on the extent of both the mark-up and SMC’s (Suzuki Motor Corp.) investment," IDFC Securities Ltd said in a note.
“The overhang of this arrangement has been nullifying the impact of Maruti’s robust operational performance," IDFC analysts Pramod Kumar and Jay Kale said in a note.
Shares of Maruti Suzuki closed 4.5% lower at ₹ 1,586.30 apiece on BSE, while Tata Motors shares gained as much as 4.38% to record ₹ 418 apiece on BSE. The scrip pared the gains to close 4.15% higher at ₹ 417.05 apiece.
The 30-share Sensex gained 0.63% to 21,120.12 points.
“Investors seem to be shifting to other auto stocks from Maruti. Tata Motor shares are benefitting, leading to a rally in the stock," said Deven Choksey, managing director and CEO of K.R. Choksey Shares and Securities Pvt. Ltd.
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