Expectations of strong Q3 results boost Maruti Suzuki shares

NEW DELHI: Maruti Suzuki India Ltd (MSIL) surged over 2 per cent in the afternoon trade, ahead of its Q3FY13 results, on Friday. According to analysts, the automaker is expected to report good earnings on the back of Yen depreciation, low base effect and margin expansion.

At 12:20 pm, Maruti Suzuki was trading 1.2 per cent higher at Rs 1556.60. It has hit a low of Rs 1542 and a high of Rs 1572 in trade today.

According to an ET Now poll, the company’s net profit is likely to increase to Rs 490 crore, up 138 per cent, against a net profit of Rs 206 crore in the corresponding quarter last fiscal.

Net sales for the quarter are seen at Rs 11,000 crore, up 40 per cent, against Rs 7,882 crore in the same period last fiscal.

“The appreciation in the Indian rupee against the Japanese Yen has significantly contributed to the rise in the stock price. Maruti Suzuki has to make 25% of the total cost in raw material payments in the Japanese Yen,” said Shardul Kulkarni, senior technical analyst at Angel Broking.

Manish Sonthalia, VP & Fund Manager, Motilal Oswal Asset Management, in an interview with ET Now, said, “Maruti will report a very decent set of numbers given the yen depreciation and there is further scope of margin expansion in the Jan-Feb-March quarter amid rate-cut hopes. Volumes are expected to pick up because it is an interest rate sensitive segment and further easing by the Reserve Bank of India will pull the passenger vehicle segment higher in which Maruti has a 40 per cent market share,” he added.

Technical View: Gaurav S. Ratnaparkhi, Technical Analyst at Sharekhan Ltd:

Maruti Suzuki Ltd is currently trading near its crucial Fibonacci level. It is trading near 78.6% retracement of the entire fall from 2009 high to 2011 low. 78.6% retracement mark is a high probability level from where trend reversals usually take place.

On the daily chart, the stock has a potential to form a ‘Double top’ pattern, whose implications are bearish from the short term as well as medium-term perspective. Follow through price action of this bearish pattern can be seen as Maruti announces its result.

The traders are recommended to take short position with stop loss above Rs 1602 and they can look for a target of Rs 1400 from short-term perspective. (The levels mentioned are cash levels).