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Elara Capital expects 20% YoY decline in EBITDA for Maruti Suzuki

Updated : January 16, 2019 02:56 PM IST

Elara Capital on Wednesday said it's expecting close to 20 percent year-on-year (YoY) EBITDA (earnings before interest, taxes, depreciation, and amortization) decline for Maruti Suzuki India.

In an interview to CNBC-TV18, Jay Kale, research analyst, said the demand has been weak across the board in the festive season and that has resulted in an inventory correction for most original equipment manufacturers (OEMs) in December, which has led to lower volumes compared to what was expected.

According to Kale, discounting was on the higher side as the festive was weak, "So across the board we would expect margin compression."

"For commercial vehicles, the volumes have been weaker, maybe flattish to negative in the Q3, where discounting is also expected to be higher. So, over there also we are expecting margin compression,” he added.

“In two-wheelers, you would have TVS and Bajaj posting growth. TVS has gained market share in the scooter segment specifically and in premium motorcycles. Bajaj on a low base has gained market share,” Kale said.

"Therefore in two-wheelers, it will be a mix of EBITDA growth and decline, but in passenger vehicles and commercial vehicles, we are expecting an EBITDA decline," he said.
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