Maruti Suzuki shares plunged as much as 2.25 per cent on Thursday after Japense yen soared almost 3 per cent against the dollar and euro on Thursday as the Bank of Japan opted out of any further moves to ease policy.
At 1.23 pm, shares of Maruti Suzuki were trading 1.72 per cent down at Rs 3,795.50. The scrip opened at Rs 3,828.15 and has touched a high and low of Rs 3,853.50 and Rs 3,775.25, respectively, in trade. Later, the share price ended 2.94 per cent down at Rs 3748.45.
According to market experts, every 1 per cent rise in yen affects 15-20 basis points (bps) of operating margin for Maruti Suzuki.
For the quarter ended March 2016, the car maker reported net profit of Rs 1,133.60 crore, down 11.73 per cent, against Rs 1,284.20 crore in the corresponding quarter a year ago.
According to Reliance Securities, broadly yen impact on quarter-on-quarter (qoq) was 100 basis points including 40 basis points due to restatement of royalty provisions. Reliance has ‘Sell’ ratings on Maruti Suzuki shares with a target price of Rs 3,641.
The brokerage house in a research note said, “In light of capacity constraint, limited customer pull, rising competition, increasing raw material cost and fluctuation in yen, we believe that our forecast captures adequate optimism.
However, Centrum Broking has a ‘Buy’ ratings on Maruti Suzuki with a target price of Rs 4,350.
(With agency inputs)