Maruti to ease rising cost pressure due to falling rupee and rising freight costs by price hike upto 1.9 per cent in June
Maruti Suzuki India Ltd. will next month increase prices up to 1.9 percent on its various models in order to pass on rise in input costs. The company attributed the proposed hike to the depreciation of the rupee against the yen and increase in freight costs for its decision. The price increase shall vary on different models and extent of price increase could be upto 1.9 pc.
Why is this important
Rupee has depreciated more than 5% against Yen during the last 6 month leading to cost increase. Further, rising oil prices has lead to increase in inbound freight cost.
How the stock will be impacted
With the increase in prices, Maruti would be able to pass on the increased input cost to its customers, thereby safeguarding its declining margins. The stock is trading at CMP of Rs. 8,560 at EV/EBITDA 14.3x FY20E and is having market capitalisation of Rs. 2,58,600 crore.