Shares of India’s largest auto-maker Maruti Suzuki slumped in trade on Monday to end more than 4% down, after the firm reported tepid results in the latest quarter. Maruti Suzuki share price ended 4.26% down at Rs 5,558.05. In the Apr-Jun period, Maruti Suzuki reported 27.3% drop in net profit to Rs 1433.55 crore. The firm had reported a profit of Rs 1,975 crore in the comparable period previous fiscal. Higher depreciation expense, lower capacity utilisation, adverse commodity prices weigh on the net profit during the quarter under review. Maruti Suzuki has reported a 14.1% jump in net sales to Rs 18,735.20 crore. Amid a slowdown in the auto sector, the Company sold a total of 4,02,594 vehicles during the Quarter, lower by 17.9% compared to the same period previous year.

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Taking stock of the reported results, global brokerage firm CLSA said that Maruti Suzuki reported weak Q1 results as volume fell 18% on-year. CLSA does not expect much of a recovery in FY20. According to the research firm, Maruti Suzuki is a good way to play a potential demand recovery. CLSA has a buy call on the stock with a target price of Rs 7,400. Goldman Sachs said that the Q1 results came in beating street estimates, due to cost controls in the firm.

The firm expects EBITDA margin to have bottomed out and better volumes are expected going forward. The financial services giant has trimmed FY20-21 earnings estimates from 7% to 4% due to higher depreciation. Goldman Sachs noted that Maruti Suzuki remains the best positioned stock going into BS-VI transition. The firm has a buy call on the shares with a target price of Rs 7,210.

Motilal Oswal noted that Maruti Suzuki is best placed in the entire OEM space to tackle the ongoing demand headwinds, particularly with regard to BS6 transition due to limited price inflation in ~80% of its portfolio. “MSIL is likely to recover the fastest once current headwinds recede due to its strong product portfolio, increased localization, reducing FX exposure and capex-light business,” said the firm. Motilal Oswal has a buy rating on the stock with a target stock price of Rs 6,950.

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