Home >Markets >Mark To Market >Maruti shares may see near-term pressure on poor results, muted demand outlook
Maruti Suzuki reports  ₹250 crore loss for fiscal 2021 June quarter.
Maruti Suzuki reports 250 crore loss for fiscal 2021 June quarter.

Maruti shares may see near-term pressure on poor results, muted demand outlook

  • The stock could decline from current levels, given the subdued near-term demand outlook for discretionary spending. Also, localised lockdowns in metros and tier-1 cities could delay resumption of normal sales in these markets

MUMBAI: Shunned for dismal June quarter earnings, shares of Maruti Suzuki India Ltd fell over 2% on the National Stock Exchnage on Wednesday. In a quarter hit by the coronavirus pandemic and the ensuing lockdown, the Street anticipated the auto major to post a net loss, its first quarterly loss in at least 15 years.

As expected, net loss in the June quarter stood at 249.4 crore. Maurti reported a net loss at the Ebitda level as well. Ebitda is short for earnings before interest, tax, depreciation and amortisation.

According to analysts, the stock could decline from current levels given the subdued near-term demand outlook for discretionary spending. Also, localised lockdowns in metros and tier-1 cities could delay resumption of normal sales in these markets.

"The earnings were subdued due to negative operating leverage in 1QFY21 amid nationwide lockdown initially and slow pick-up later on. Moreover, adverse product mix, higher other expenses took toll on its operating margins. Post 24 March 2020, Maruti and other stocks rallied very sharply and these bad numbers will give an opportunity for investors to book profit and wait for better entry points," Arjun Yash Mahajan - head- institutional business at Reliance Securities said. The broking house has maintained a buy rating on the stock.

Similarly, analysts at Emkay Global Financial Services, in a note, said these earnings are slightly negative for the stock. "However, MSIL should hold the pole position, owing to an increase in share of petrol vehicles, focus on new products and network expansion. Our checks indicate a new product pipeline including gasoline S-cross, XL5 UV-styled hatchback, BS6 diesel models, Jimny off-roader UV, electric hatchback, 800cc hatchback, new UV (over 4m), among others over the next two years. We have a Buy rating on the stock."

In the April-June quarter, Maruti sold a total of 76,599 vehicles, down 81% from 4,02,600 units sold in the year-ago period. Domestic sales were at 67,027 units while exports at 9,572 units, down 82% and 66%, respectively, on a year-on-year basis.

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