Global markets research Nomura said that market leaders such as Maruti Suzuki in passenger vehicles (PVs) outperformed the industry.
Maruti Suzuki share price jumped 3.3 per cent to settle at Rs 7,210 apiece from day’s low on Friday. The stock has been on a gaining spree since it has released August sales numbers on Tuesday this week. Maruti Suzuki shares have gained 5.44 per cent in three trading sessions. The auto major’s domestic passenger vehicle sales grew by 15.3 per cent sequentially and 17.1 per cent on-year. Analysts say that a strong recovery in the passenger vehicle segment with double-digit volume growth on yoy basis in Aug’20 is the key positive trigger. “Maruti Suzuki’s improving market shares on the back of wide rural network, the revival of urban markets post unlocking and overall volume recovery faster than expected have led to the price run-up,” Mitul Shah, Vice President (Research) at Reliance Securities, told Financial Express Online.
In comparison, S&P BSE Sensex ended 1.63 per cent down at 38,357.18. Mitul Shah also said that seeing the company’s strong balance sheet to handle the current crisis, he is positive on the stock. “PV sales were driven by the further ramp-up of operations and strong demand for small cars (mini and compact), which grew by 24.4 per cent on-year, driven by rural and semi-urban markets,” said brokerage firm Nirmal Bang.
Global markets research Nomura said that market leaders such as Maruti Suzuki in passenger vehicles (PVs) outperformed the industry. “We believe segment leaders will continue to benefit, as 1) customers will be less inclined to shop due to COVID-19 outbreak, and 2) they have wider reach into rural areas,” it said. The brokerage also added that the rural demand is expected to remain strong due to the benefit of a healthy crop outlook and strong government support. The firm said that retails for PVs and 2Ws benefited from festivals like Ganpati and Onam in August 20 (vs. in September last year). The report also noted that retails are likely to slow down in September this year due to the inauspicious period of ‘Shradh’ (1 Sept -17 Sept), and Adhik maas’ (18 Sept-16 Oct) which is longer this year compared to last year.
Sales of Maruti Suzuki rose to 124,624 units last month as compared to 106,413 units in the corresponding month of the previous year. While in the preceding month, the company sold 108,064 units. The company registered a 21.7 per cent on-year growth in volumes on the back of increased demand for compact cars. The total sales include domestic sales of 115,325 units and 1,379 units for other OEMs. In addition, the company exported 7,920 units in August 2020, which is a drop of 15.3 per cent over August 2019.