Shift from diesel to CNG to bring windfall gains for Maruti; UBS sees Rs 3100 per share gains

Maruti Suzuki India Limited ’s (MSIL) shift from diesel to CNG and hybrid options could be a game changer for the company, global brokerage firm UBS said. The brokerage sees an estimated Rs 3100 per share gains for investors. This translates into 35 per cent upside from level of Rs 8874 at which the stock was recommended.  

The Zurich headquartered financial services company said that Maruti’s shift from diesel will be a big positive or for country’s largest passenger car maker. The move will trigger customer switch to CNG and hybrid options, UBS noted.  

The stock was trading at Rs 8,959 on the NSE at the time of filing the story and were up by Rs 85.25 or 0.96 per cent.  

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The company offers its flagship brands Dzire, Celerio, WagonR, Ertiga, Alto, S-Presso and others in CNG variants. The hybrid variants include Ertiga, Brezza, Ciaz and Grand Vitara.

UBS said that the diesel story has derailed as focus on cleaner options gather ground. The switch is important as Real-world Driving Emission (RDE) norms go live from April 2023. RDE norms will ensure that cars deliver low emissions in real world driving conditions. The company will be the biggest beneficiary of switch, the brokerage noted.

Diesel accounts for 19 per cent of the industry's demand.

Technical View

Market expert Sanjiv Bhasin in chat with Zee Business Managing Editor Anil Singhvi reiterated UBS’ view highlighting that Maruti will have the biggest advantage among its peers as new norms kick-in. He sees MSIL to test level of Rs 11000.

Maruti Suzuki Price Movement

Investors can look to buy Maruti shares at Rs 8920 with a stop loss of Rs 8700. The IIFL Director said that the stock will achieve levels of Rs 9500 in next three trading sessions – up to Rs 580 per share or 7 per cent.

Technical analyst Nilesh Jain has a positive view on the stock. He sees support at Rs 8500 with a price target of Rs 10000/10500. 

(Disclaimer: The views/suggestions/advises expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)