The recent incident at Manesar plant had really cracked Maruti price down from Rs 1240 to Rs 1090. Many investors are jumping into to accumulate as many as possible.

 

Many brokerage houses and analysts have come out with their estimates. One of the brokerage houses has estimated that Maruti is making a loss of Rs 8 Crore for every single day lock out!  But all the big brokerage houses have not yet cut their earnings estimate.

 

Talking about earnings, Maruti Suzuki has reported EPS for March 2012 year end Rs 56.6 which translates its ROE for the year at 11%. The recent merger with SPIL has been taken by many analysts and brokerage houses as a good strategy and sees synergy within this transaction. This transaction has also diluted 5% of its shareholders equity.

 

Maruti Suzuki had witnessed 5% growth in its sales revenue on the basis of their monthly vehicle sales reports for the first quarter of 2013. Many brokers are expecting its ROE for the year end 2013 at around 16% and for the year end 2014 around 18%.

 

With one side because of stiff competition and other factors Maruti is finding it hard to grow its sales revenue, it is hard for  me to believe in those estimates.

 

Value Operations have given a quality and performance rating for Maruti Suzuki as ‘B2’. Looking at valuations for this company on a very conservative way, Value Operations value this business for year end 2013 to be Rs 690 and for 2014 at Rs 972. This translates it is still trading at big premiums.

 

What do you think? Is it a good time to get into Maruti Suzuki or just ignore and look for other available opportunity?