Nifty Auto: The stock of Maruti Suzuki India saw a gain of about 3 percent during early trading on January 17. The car company’s stock has benefited from the announcement of hike in prices of all models on account of various input costs.
The company said in an exchange filing, “In continuation of the last communication dated December 2, 2021, the company has announced changes in the prices of all models due to increase in input cost. The average price of all models has been increased by 1.7 per cent. The new prices will be applicable from January 15.”
Maruti Suzuki up 3%
At present, the stock of Maruti Suzuki is trading at Rs 8,325 (12 noon) with a gain of about 3 per cent. It had touched an intraday high of Rs 8,369 and an intraday low of Rs 8,101.
In the coming days, the Nifty Auto index saw a gain of over 1 per cent on the expectation of strong inflows from passive funds. Dealers said the newly launched Nippon India Mutual Fund Auto ETF is expected to start investing in the coming days, which will buy into several Nifty Auto Index stocks.
Considering Maruti Suzuki’s 19.5 per cent weight in the Nifty Auto Index, it is anticipated that the bulk of the passive money will come to the company, giving the stock a gain of 3.2 per cent intraday. On the other hand, Tata Motors, Ashok Leyland and Hero MotoCorp are seeing gains of 2 to 5 percent.
Hero MotoCorp approves big investment
The company’s stock gained 5 per cent in early trade after Hero MotoCorp announced a fresh investment of Rs 420 crore in Ather Energy. The Board of Hero MotoCorp has approved this investment in one or more installments.
Brokerage house expects more from commercial vehicle
According to research and broking firm ICICI Securities, most of the companies in the sector are close to their earnings multiples on anticipation of a good recovery as compared to the FY22E base, so we are seeing limited gains. The brokerage said, “Comparatively, we prefer CVs where we expect earnings to improve and then re-rating. The biggest risk is critical commodity cost deflation, where there remains a risk of pressure on recovery in production impacted by semiconductor chip supply.”
During FY19-22, volumes across all sub-segments declined by around 20-40 per cent and EBITDA margins declined by 300-800 bps on account of commodity cost inflation. The brokerage firm said prices are expected to rise gradually in FY23-24 amid revival in demand and stabilization in the raw material cost basket.
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