Auto News

Maruti Shows Poor Quarterly Results, falls 12.31%

By Motortrend India Staff   |   26 July,2010

Maruti Suzuki has fallen 12.31 per cent on Monday on the Bombay Stock Exchange (BSE) due to the company’s poor quarterly results.


Maruti’s net profit for the June quarter came down by 20 per cent to Rs 456.36 crore against Rs 583.54 crore in the same quarter a year ago. And surprisingly the company’s net has fallen for the first time in the last five quarters (after the March quarter of FY09).


Maruti Suzuki has been hit by the rising costs of raw materials, an increase in royalty payments to its parent company, Suzuki Motor Corporation, and a weakening euro that has affected export revenues.


“Escalating competition in the high-volume A2 segment has negatively affected Maruti’s market share. However, introduction of new models and a lower cost of ownership, combined with wide sales, will help the company in the long term,” Citi said in its report. The royalty payment by Maruti increased from an average of 3.5 per cent to five per cent of sales.


“This will have a direct negative impact of 150 basis points on earnings before interest, taxes, depreciation, and amortisation margins going forward,” said a report by Kotak Securities.


Other auto stocks that took a hit are Hero Honda, down 7.46 per cent, or Rs 146, followed by Tata Motors, down 2.24 per cent. The only auto stock which closed positive on Monday was Bajaj Auto; the scrip gained 2.33 per cent, or Rs 57.50.



Related Content