Maruti Suzuki announces a one day shutdown at its plants - Angel Broking

According to media reports, Maruti Suzuki (MSIL) has announced a one day shutdown across its plants on June 7, 2013 to avoid unnecessary build up of inventory and align the production in-line with the market demand. The company's plants in Gurgaon and Manesar will also remain closed on June 8, 2013 for a scheduled holiday. The decision has been taken considering the weak demand in the passenger vehicle industry which continues to witness slowdown in sales.

MSIL reported 14.4% yoy decline in its monthly sales in May 2013 with the compact (down 20.4% mom and 29.4% yoy), super compact (down 11.2% mom and 2.5% yoy) and utility vehicles (down 19% mom and 44.3% yoy) segments witnessing sluggish performance during the month. Nevertheless, we expect MSIL's volumes to improve in 2HFY2014 (expect ~8% volume growth in FY2014) driven by the expected easing of interest rates which is likely to boost consumer sentiments leading to demand revival in the passenger car segment.

At Rs. 1,587, the stock is trading at 12.9x FY2015 earnings. Currently, we have a Buy rating on the stock with a target price of Rs. 1,847.

Source : Equity Bulls

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