Top Auto Sector Pick For Coming Days : Maruti Suzuki

26 Nov

Posted by Shyam as Market News

Maruti Suzuki is one of India’s leading automobile manufacturers and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned. Maruti Suzuki, the leading four-wheeler automobile manufacturer in South Asia has once again exhibited exceptional performance by yielding a 32.4% year-over-year growth this October with 85415 units.

This rise in growth is attributed to the increasing sales of the KB Engine series car, the A-Star. Thus Maruti Suzuki could boost up its exports and achieve a 158.5% year-over–year growth. On the domestic front, the recorded growth is 21% with a sale of 71551 units this year compared to 59127 units in October 2008.

While the company is looking to increase its sales further, the constraint that it faces is production capacity. Presently the production capacity is fully utilized, and it would be difficult even to increase its present production from 85,000 units to 90,000 units per month. Though, it has not disclosed any plans, the company is seriously contemplating to shift its assembly division from Gurgaon to Manesar. This would enable to increase the capacity for the production of faster selling models.

It is expected to achieve a year-over-year growth of 20% at a 950,000 unit level in the year 2010. This would mean a 13.8% residual growth. The Company is registering improved performance and its stock is quoted at the Stock exchange at 17x FY11 EPS of Rs 82.6 and 12x FY11 Cash PE.

The Company that started its journey 25 years ago with a small volume of 800 vehicles, now proudly boasts of having produced over 80 lakh cars so far. Its headquarters are situated at Gurgaon in Haryana and has another unit at Manesar South of New Delhi. Maruti is clearly an “employer of choice” for automotive engineers and young managers from across the country.

Nearly 75,000 people are employed directly by Maruti and its partners. The company vouches for customer satisfaction and has been rated first by the customers in terms of customer satisfaction, in the annual survey by J D Power Asia Pacific, ten years in a row. You can buy the stock on dips like today when it fell by 3% and expect good returns in coming days. The best time to buy Maruti is about 1400 levels and you can expect the stock to zoom to 1700 levels in coming days.