Isuzu SML up 18% due to higher product prices; Healthy March Sales

Shares of SML Isuzu rose 18 percent to Rs 697 on BSE in day trade Monday after the company said it decided to increase the prices of its products (across all models – trucks and buses) by 3-4 percent, effective Monday, April 4, 2022.

While the company is taking measures to absorb the impact of a sharp increase in commodity prices and other input costs, an upward revision was necessary to partially offset the impact of increased costs, SML Isuzu said in a stock exchange filing.

Meanwhile, total sales of the company increased by 43 percent to 1,363 units in March 2022. Passenger vehicle sales more than doubled to 665 units from 273 units in March 2021. However, freight vehicle sales increased by 3 percent in cent to 698 units. From 679 units last year.

SML Isuzu is primarily engaged in the manufacture of commercial vehicles and related components.

The Domestic Commercial Vehicle (CVI) industry, which was already in the midst of a downturn, experienced a sharp contraction in volume during FY 2020-2021 (FY21) as the Covid-19 pandemic added to its woes.

Due to the closure of schools, educational institutions, negligible tourist operations throughout the year and work from home adopted by most companies, the demand for buses has been severely affected.

Truck demand is likely to gain momentum with the gradual recovery in the economy, construction and infrastructure activities, regular monsoons, and last-mile transportation. Analysts believe the situation will return to normal from Q1 FY23 onwards with healthy double-digit volume growth expected in FY23E of about 12 percent year-over-year for the auto industry as a whole. It will broadly support a low base after three years of decline, favorable demographics, projected economic growth, and a renewed focus on personal mobility.

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