Maruti Suzuki to benefit from falling yen, stock up over 4%

Shares of Maruti Suzuki India rallied 4.2% on hopes that a weak yen, which hit a three-and-half year low, will improve its margins by reducing costs of importing auto parts and paying lesser royalty to Suzuki.

The yen slumped to a three-and-half year low on Friday after the Bank of Japan unveiled a bold plan to pump money into the economy. The BOJ surprised markets when it unleashed the world's most intense burst of monetary stimulus, planning to nearly double the monetary base to 270 trillion yen by the end of 2014, in a shock therapy to end two decades of stagnation.

Analysts say weakness in yen will benefit Maruti Suzuki. It will improve operating margins since royalty payments which are denominated in yen account for 5-6% of its sales. Also cost of component imports which contributes 19-20% of sales will come down.
 
At 10:58 hrs the share was quoting at Rs 1,366.45, up Rs 55.25, or 4.21 percent. It has touched an intraday high of Rs 1,370.35 and an intraday low of Rs 1,324. It was trading with volumes of 43,485 shares.

In the previous trading session, the share closed up 0.43 percent or Rs 5.60 at Rs 1,311.20.

With inputs from Reuters