Stock Market

Motherson tanks 9% on domestic biz, Volkswagen woes

The brokerage adds that Motherson’s near dominance with Maruti is reducing as the four-wheeler manufacturer is decreasing its single vendor concentration. Maruti is in process of enforcing its single vendor not having more than 70 percent share. Hence, Motherson which enjoys 85 percent share in Maruti component parts will suffer.

Chillicious Team


Shares of Motherson Sumi tanked 9 percent intraday on Monday as investors grow worried about its domestic business. Raising concerns, Credit Suisse says that channel checks indicate slowdown in Mothersons domestic business.


The brokerage adds that Motherson’s near dominance with Maruti is reducing as the four-wheeler manufacturer is decreasing its single vendor concentration. Maruti is in process of enforcing its single vendor not having more than 70 percent share. Hence, Motherson which enjoys 85 percent share in Maruti component parts will suffer.


Another factor to worry about is competitiveness from Japanese counterparts. Other Japanese wiring harness majors like Yazaki and Furukawa are starting to gain share.  Furukawa aims to capture 30 percent of Maruti’s wallet in two years from 10 percent at start of 2015.


Meanwhile, one of the Motherson’s client Volkswagen is in trouble after US authorities accused the German carmaker of falsifying emissions data, which means it could face penalties of up to USD 18 billion.


Th Europe’s largest automaker is accused of designing software for diesel models of its core VW brand and luxury division Audi that deceives regulators measuring toxic emissions, reports Reuters.


The stock ended at Rs 262.15, down Rs 21.70, or 7.64 percent on the BSE.

Posted by Nasrin Sultana
Follow @NasrinzStory