Maruti stock falls almost 4% after UBS downgrades to sell

Share price of Maruti Suzuki, the largest car manufacturer in India, fell 3.5% in today's trade, after global brokerage house UBS downgraded its rating to sell from buy.

UBS has slashed the target price by 27.5% to Rs 5,800/share from Rs 8,000/share.

Recently in a regulatory filing, Maruti Suzuki India had announced that the company had cut vehicle production for the fourth consecutive month in May, as weak domestic demand left the stockyards chock-full of unsold vehicles.

"We are surprised by sharp 20% plus decline in volumes in April and May 2019," said the investment adviser. "We expect a 2% year-on-year decline in growth in FY20E against 4% growth earlier," the brokerage added.

On Thurday, Maruti Suzuki also increased prices of new variant cars as the company became the first car manufacturer to introduce BS-VI compliant models in the market.

"Maruti is unlikely to benefit from BS-VI and we have not built in negative operating leverage in our recommendations," the brokerage added.

The stock touched an intraday low of Rs 6,382.30, after a 3.84% fall from the previous close. Maruti Suzuki's stock price is trading mere 0.95% away from 52-week low of Rs 6,324.35.

A total of 13.45 lakh shares and 0.73 lakh shares are changed hands on NSE and BSE, respectively.

Maruti stock price closed at Rs 6,425, down by 2.90% on NSE and at Rs 6,412, down by 3.39% on BSE platform.

(Edited by Rupa Burman Roy)

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