Kotak Institutional Equities downgraded Maruti Suzuki India Ltd to "sell" from "reduce," saying the outlook for the company will be more challenging than currently priced by the stock.
Kotak notes Maruti Suzuki shares are factoring in expectations for a "sharp recovery" in volumes in fiscal year 2015 but says the year could instead be challenging because of "high inflation and weak job market conditions."
"We are also concerned on low capacity utilisation levels of the industry and strong competitor launches, which will restrict operating margin improvement," Kotak adds.
Maruti shares are up 19.7 percent so far this year, after hitting a record high on December 20. Its shares were down 1.3 percent at 1.51 pm.