Maruti results have beaten estimates, hold stock at current levels: Silky Jain, Nirmal Bang Securities

In an interview with ET Now, Silky Jain, Research Analyst - Equity Research, Nirmal Bang Securities, gives her views on Maruti’s Q4 earnings. Excerpts:



ET Now: We have got the sales and PAT numbers for Maruti. PAT is at Rs 1150 crore while sales have come in at Rs 13056 crore. How are you taking in these initial figures?

Silky Jain: The results have beaten our estimates. Our expectation was around Rs 700 crore of PAT and the number looks big. So we need to check out on what are the gross margins. What needs to be seen is if there is any extraordinary gain or something which has come up for the company which needs to be looked out for.

ET Now: The Maruti stock is on a tear. It is now up almost 3% on the back of strong numbers. What is your call on the stock?

Silky Jain: We have seen a sharp rally in the stock. We would like to wait for the management commentary and then we would visit our estimates. We would like to see the management’s outlook for the volumes going forward. As of now, the stock is going to perform and we would like to visit our target price after that, but it is good to hold the stock at current levels.

ET Now: It has been a swift up move as well over the last month or so. We have had a good 22% rise in the stock. What is it that you are building in and what is it that you were expecting on the operational front?

Silky Jain: We were definitely expecting an improvement in margin because of the depreciation of the yen, which is a major factor in contributing towards the margin. Moreover, richer product mix and rising contribution from diesel models are also a big boost for the company’s margins, but any meaningful recovery in the volumes is not expected immediately. We feel that the second half would be much better than the first half as the slowdown continues to persist in the overall auto industry. As of now we do not find any trigger or growth coming up, but maybe in the second half is what we are expecting.