Maruti Suzuki reported Q2 earnings, which was below street estimates, but that did not deter investors as the stock continued to climb. Margins have come in at 10.3 percent versus an expectation of 11 percent, EBITDA was slightly lower at Rs 1,933 crore versus expectations of Rs 2,100 crore. The second quarter was supposed to be a good for Maruti as it reported the strongest volume growth in the sector aided by demand recovery. As other income dipped, it resulted in profits being below estimate.
According to market expert Prakash Diwan, "The numbers are a bit of a disappointment, but I would attribute the increase in cost not only just to the RM side, but the product mix which is responsible for lower realisations."
"Maruti would be a good buy on dips. I think the key trigger to buy into Maruti will be sometime early January or late December and a lot of negativity would have got out of the stock by then. New product launches and seasonality factor will make the stock viable sometime in December," he added.
Mitul Shah, Head of Research at Reliance Securities said, "Price target is lower, but we would revisit post the conference call. We need to upgrade the valuation multiple considering the better visibility and overall passenger vehicles itself is already being reporting much higher numbers than expected. So recovery is much faster than what we expected few months ago."
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(Edited by : Jerome Anthony)