Maruti Suzuki hits record high, ITC rises nearly 3% ahead of Q2 earnings

Moneycontrol News

Car maker Maruti Suzuki India share price touched a fresh record high of Rs 8,209 on Friday, rising 1.6 percent intraday and cigarette major ITC rallied nearly 3 percent ahead of earnings for the quarter ended September 2017.

For ITC that has major market share in cigarette segment, it is an important quarter to watch out for after the GST implementation with effect from July 1.

The GST Committee had set the tax rate lower for cigarette business but then revised higher to pre-GST levels. Hence, the stock had seen roller coaster ride, hitting a life high of Rs 353 on July 3 and then falling 13 percent on July 18. It fell 16.2 percent during the quarter.

Analysts expect cigarette volumes to decline 4-5 percent (against 1 percent growth in Q1FY18 and 4 percent in Q2FY17) and realisation growth at around 11-12 percent for the quarter ended September 2017.

Profit after tax is expected to increase 6.1 percent year-on-year to Rs 2,652 crore and revenue may rise 6.7 percent to Rs 14,525 crore, according to average of estimates of analysts polled by CNBC-TV18.

Revenue should be closely watched as it may differ due to GST accounting. Excise duty has been removed after GST rollout.

Meanwhile, automobile major Maruti Suzuki is likely to post lower profit at Rs 2,217.5 crore in July-September quarter against Rs 2,398 crore in same quarter last fiscal, according to a CNBC-TV18 poll. Higher tax outgo and lower other income are likely to impact profits.

The company’s net sales, however, are likely to be up 23.4 percent at Rs 22,014.1 crore against Rs 17,842.8 crore. On an operating level, the EBITDA is likely to be higher by 6 percent at Rs 3,216 crore, while the margin is seen at 14.6 percent against 17 percent YoY.

Among the key things to watch are operating margins, which could be impacted by lower gross margins due to rise in commodity prices. In fact, the ramp ups of Gujarat plans could also impact the margins, along with higher offers due to GST and festive season.

At 13:12 hours IST, Maruti Suzuki India was quoting at Rs 8,190.95, up 1.42 percent and ITC was up 2.35 percent at Rs 274.80 on the BSE.