04 Dec , 2021 By : monika singh
Mumbai: CLSA has downgraded its rating on Maruti NSE -1.59 % Suzuki India to 'sell' from 'underperform' and lowered target price to ?6,420 from ? 6,550 as the automaker has been consistently losing market share in the fast growing and most profitable sports utility vehicle (SUV) segment.
"The company is likely to lose 600 bps (basis points) of market share over the FY20- 22 period in the domestic passenger vehicle industry due to the the significant increase in share of SUV segment passenger vehicles and Maruti's loss of market share in this segment," said CLSA in a note.
Shares of Maruti Suzuki India ended down 1.7% at ?7,202.15 on Friday.
CLSA said its earnings estimates are 17-20% lower than consensus for FY23 and FY24 as it continues to forecast market share losses for Maruti due to weak model launch pipeline.
CLSA said the SUV segment share in the domestic passenger vehicle industry has risen to 39% in FY22 till October from 32% in FY20 while Maruti's market share has declined 560 basis points in this segment. The brokerage estimates Maruti's earnings before interest, taxes, depreciation and amortisation per vehicle to rise to ?55,656 in FY24 from ?32,511 in FY22 on assumption of a 10?cline in commodity costs and improvement in its product mix.
Maruti reported a 9.2% year-on-year drop in total sales for November to 1.4 lakh units.
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