Maruti Suzuki slips 2% on one day shutdown at its plants

NEW DELHI: Maruti Suzuki Ltd slipped over 2 per cent in morning trade on Friday, after the country’s largest car maker announced a one day shutdown across its plants on June 7, 2013 to avoid unnecessary build up of inventory.

At 09:50 a.m.; Maruti Suzuki was trading 1.7 per cent lower at Rs 1559.50. It hit a low of Rs 1555 and a high of Rs 1574.95 in trade today.

The company's plants in Gurgaon and Manesar will also remain closed on June 8, 2013 for a scheduled holiday.

"The decision has been taken considering the weak demand in the passenger vehicle industry which continues to witness slowdown in sales," Angel Broking said in a report.

Almost all segments of Maruti Suzuki witnessed sluggish performance on account of continued slowdown in demand and also due to increasing competition, say analysts.

MSIL reported 14.4 per cent YoY decline in its monthly sales in May 2013 with the compact down 20.4 per cent MoM and 29.4 per cent YoY, super compact down 11.2 per cent MoM and 2.5 per cent YoY and utility vehicles down 19 per cent MoM and 44.3 per cent YoY segments witnessing sluggish performance during the month.

Nevertheless, the brokerage firm expects MSIL's volumes to improve in 2HFY2014 driven by the expected easing of interest rates which is likely to boost consumer sentiments leading to demand revival in the passenger car segment.

The stock is trading at 12.9x FY2015 earnings and we have a Buy rating on the stock with a target price of Rs 1,847, added the report.