Maruti Suzuki India Ltd rose over 4% on Tuesday's trading session after the company's chairman RC Bhargava said that car sales in September are likely to be higher than the previous month, as the uncertainty around the goods and services tax (GST) rate cut is over. He added that very high sales are expected on September 29 and 30.
Maruti share price rose 0.15% at the opening bell to Rs 6,909 on BSE, against the previous closing of Rs 6,899.20. Later the stock rose 4.12% to the day's high of Rs 7183.75, also its month's high.
Volume-wise, shares amounting to 1.5 lakh and 21.7 lakh shares were changing hands on the bourses, BSE and NSE, respectively. Overall the stock value has risen over 8% in a week, over 11% in one month and 7% in the last six months.
"We expect that retail sales in September would witness an improvement over August," Bhargava told reporters on a press conference scheduled on Monday, 23 September 2019.
"The booking levels have gone up substantially compared to last month, and the expectation is that the 29th and 30th of this month will probably witness very high retail sales," Bhargava told the media.
The festive season in India that typically starts in end-September and lasts till October usually sees an uptick in auto sales. September 29 also marks the beginning of the 9-day Navaratri festival. Vijayadashami, also known as Dasahara, falls on 8 October 2019.
Country's biggest automaker posted a steep 36% decline in sales in August, one of the biggest monthly drops ever recorded. With 93,713 units, August was the second month in a row the company had dispatched less than 100,000 cars to dealerships.
Recently at the India Today Conclave 2019, Bhargava also talked about price cuts across Maruti Suzuki vehicles. Niti Aayog CEO Amitabh Kant who was also part of the panel discussion had urged automakers to slash prices to increase demand and revive sales.
In a move to revive sales in the upcoming festive season, the nation's biggest carmaker has offered hefty discounts, reportedly up to Rs 1 lakh this month and plenty of other benefits.
The local unit of Suzuki Motor Corp. has also requested the commercial banks to lower their rates on vehicle loans, in line with recent reductions in the repo rate by the RBI, to make it easier for car buyers to purchase new vehicles.
The stock has been on an uptrend since the government announced cut in the corporate tax rate. The effective corporate tax rate after surcharge now stands at 25.17%. As on 31 March 2019, Maruti Suzuki India paid corporate tax of 29.71%.
At 1445 IST, Maruti shares were trading 1.03% or 70 points higher at Rs 6,970 on BSE.
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