Maruti Suzuki shares fall 4% to snap six-day winning streak; HSBC says one factor key for the stock

Shares of Maruti Suzuki India Ltd. are down over 3.5% on Wednesday, January 7, and have snapped a six-day winning streak in the process. 

On Tuesday, brokerage firm HSBC maintained its "buy" rating on Maruti Suzuki with a revised price target of र18,500 per share.

The analyst said the automaker's market share has normalised back to 40%, though the overall demand outlook remains buoyant.

With all stars aligned, Maruti Suzuki's third and fourth quarter margins are critical for the stock, HSBC said.

However, HSBC has warned that in case Maruti Suzuki's Earnings Before Interest and Tax (EBIT) margins are below the mark of 10%, that could end up disappointing the market. Commodities are also posing a near-term risk for the stock, HSBC added.

The automaker reported total sales of 2.17 lakh units in December compared to Street estimates of 2.12 lakh units. The sales were also 22.2% more than the previous year's 1.78 lakh units.

Of these, the total domestic passenger vehicle sales increased 37.5% to 1.78 lakh units from 1.3 lakh units in the year-ago period. Alto, S-Presso sales were up 92% at 14,225 units from 7,418 units in the previous year.

Of the 49 analysts that have coverage on the stock, 38 have a "buy" rating, seven have a "hold" rating and four have a "sell" rating.

Shares of Maruti Suzuki India are down to the day's low, currently trading 3.7% lower at ₹16,654. The stock has risen 43% in the last one month.

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