Maruti Suzuki announces 1.3% price hike across models; what should investors do with the stock?

On the back of high input costs, the auto major Maruti Suzuki on Monday announced 1.3 per cent price hike across models, the company’s filing to exchanges said. 

The company announced changes in prices across models owing to an increase in various input costs, Maruti Suzuki said. “The weighted average increase across models is 1.3 per cent – Ex-Showroom Prices (Delhi). These new prices will come into effect from 18th April 2022.” 

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On April 6, the auto heavyweight had said, “Over the past year, the cost of company's vehicles continued to be adversely impacted due to increase in various input costs. Therefore, it has become imperative to pass on some impact of the above additional costs to customers through a price hike.” 

The company had intimated that this price rise shall take place in April 2022 and the increase shall vary for different models. 

On Monday, shares of Maruti Suzuki showed upward movement in the early morning trade above Rs 7500 per share. The stock gained over 1 per cent to Rs 7552.55 per share on the BSE intraday trade. 

The market analyst and Choice Broking Executive Director Sumeet Bagadia has advised existing investors to Hold the stock and suggested fresh investors to buy on dips as the stock has shown an overall upside move and shall touch Rs 7800-8000 per share levels once it breaches Rs 7600 apiece level.  

Domestic brokerage firm Centrum Broking stated that commodity prices continue to affect the margins and rising competition could restrict price increases as an attempt to arrest market share losses of Maruti Suzuki. 

The brokerage cuts FY22/23 margins by 60 basis points each to 6.6/9.8 per cent resulting in an EPS cut of 9.4/5.8 per cent for FY22/23. Market share loss on a weaker SUV portfolio will continue to haunt the company’s valuation in brokerages’ view.