Maruti Suzuki shares snapped a five-day losing streak on Monday. The stock traded 2 per cent higher, outperforming the broader auto space, which gained 1 per cent in a flat market today.
Maruti Suzuki shares had recently rose to a new 52-week high of Rs 1,537. At 11.10 a.m., the stock traded 2 per cent higher at Rs 1,503 on the BSE today.
Analysts attributed the gains in Maruti shares to the sharp depreciation in Japanese yen. The yen has depreciated 10 per cent since February 2012. It hit a low of 84.48, its weakest since April 2011, after the country's Liberal Democratic Party (LDP) swept back into power at weekend elections.
Domestic brokerage Motilal Oswal says LDP leadership could lead to further weakness in the yen. Japanese conservatives favour greater economic stimulus to revive the economy.
Maruti's exposure to yen accounts for nearly 21 per cent of net sales; 5 per cent goes to royalty, 9 per cent to vendors and 7 per cent is on account of direct imports. A 1 per cent deprecation in yen leads to 2.2 per cent positive impact on Maruti's Earnings per Share (EPS).
Maruti's earnings have been on an upgrade mode, domestic brokerage Motilal Oswal says. The upgrade cycle in Maruti is likely to continue led by more favorable exchange rate, the brokerage added.
Among global brokerages, Credit Suisse prefers Maruti in the four-wheeler auto space.
(With inputs from agencies)