The impact of the workers’ violence at Maruti Suzuki’s Manesar plant in July appears to cast its shadow even now on the company’s performance as revealed by its latest quarterly numbers.
But the fortunes of the shareholders of Maruti appear to have witnessed a turn around with the stock hitting its 52-week high on Wednesday. What is significant is that the stock has gained by about 25 per cent since the incident.
Murder, lockout
Maruti had declared a month long lockout at its Manesar plant after violence broke out at the plant in July in which its GM (HR) Awanish Kumar Dev was killed and about 100 more were hurt.
On July 19, a day after the violence, the stock fell to Rs 1,117.35 and after the lock- out announcement on July 21 it slipped further to Rs 1,079.95 on July 23. The lockout declared on July 21 continued till August 21. This led to a sharp 40 per cent decline in sales in August with Maruti selling just 54,154 units compared to 91,442 units in the same month last year.
Yaresh Kothari (Research Analyst — Automobile), Angel Broking, Mumbai, said investors seem to be betting on revival in volumes in second-half of current fiscal led by festival demand after the Maruti management indicated that the festival sales so far appear to be good.
On the reasons for the turnaround in investor sentiment, he cited restoration of production at Manesar plant, strong demand for new launches such as Swift, Dzire and Ertiga, likely revival in demand for petrol cars led by new Alto 800 along with expected improvement in operating performance going ahead as major factors. He felt “the stock appears to be fairly valued at current levels’ and upside is ‘very limited’.