Maruti Suzuki Shares Drop As July Sales Decline

Shares of Maruti Suzuki India Ltd. were down nearly 4% on Friday after the carmaker reported decline in sales during July.

Total sales—including domestic sales, sales to other original equipment manufacturers and exports—fell 4% year-on-year to 1.75 lakh units last month, as against around 1.82 lakh units a year ago.

Domestic sales, which includes sales of cars and the super carry light commercial vehicles, also declined 9.26% YoY to 1.40 lakh units in July. This compares to 1.55 lakh units a year ago. However, sales to other original equipment manufacturers, including Toyota Kirloskar Motor India Pvt., more than doubled to 10,702 units.

Exports increased by 8% year-on-year to 23,985 units.

Nomura maintained its 'neutral' stance on the car manufacturer with a target price of Rs 13,133 per share.

Despite the launch of the new Swift last month, Maruti Suzuki's domestic sales volumes, excluding light commercial vehicles and original equipment) were down 10% on-year, the brokerage noted.

The company's retails are lower than wholesales, and channel inventories have likely climbed to 38 days, up from the normal 30 days, according to Nomura.

Small car sales are unlikely to revive due to a change in customer preference, it said.

Shares of Maruti Suzuki fell as much as 3.96%, before paring some loss to trade 3.12% lower at Rs 12,942 apiece, compared to a 0.92% decline in the benchmark Nifty 50 as of 10:15 a.m.

The stock has risen 34% in the last 12 months and 25.56% year-to-date. Total traded volume so far in the day stood at 1.8 times its 30-day average. The relative strength index was at 57.18.

Thirty-one out of 46 analysts tracking Maruti Suzuki have a 'buy' rating on the stock, 11 recommend a 'hold' and four suggest a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 10.5%.