Kotak downgrades Maruti Suzuki citing volume challenges

Kotak Institutional Equities downgraded Maruti Suzuki India to "sell" from "reduce," saying the outlook for the company will be more challenging than currently priced by the stock.

Kotak noted Maruti Suzuki shares are factoring in expectations for a "sharp recovery" in volumes in fiscal year 2015, but said the year could instead be challenging because of "high inflation and weak job market conditions." (See levels and price targets)

"We are also concerned on low capacity utilization levels of the industry and strong competitor launches, which will restrict operating margin improvement," Kotak added.

Kotak is only one of five brokerages out of 54 tracked by Thomson Reuters to rate Maruti Suzuki at "reduce", "underweight", or "sell."

Maruti shares are up 19.7 per cent so far this year, after hitting a record high on December 20. Its shares were down 1.3 per cent at 1.51 p.m. (Track stock)


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