New Delhi, Sept. 5 -- Shares of Maruti Suzuki India Ltd have lost about 35% in market capitalization in the past year. The stock's falling valuation underscores the lack of confidence among investors of a near-term recovery in passenger car sales. Even so, Bloomberg's one-year forward price-to-earnings multiple of 23 looks rich, given the backdrop of a continued fall in automobile sales.

Importantly, the mood continues to be pessimistic even for the coming festive season. Car dealers are fearful of high inventory. Retail sales forecasts for cars are subdued. Why else would the country's largest car manufacturer announce a two-day production cut in early September?

A Credit Suisse Securities (India) Pvt. Ltd report said: "Maruti's produc...