Pick up in PV sales, return of product lifecycle to drive Maruti Suzuki stock price; brokerages see up to 30% upside in one year

Domestic and global brokerages feel that a pickup in personal vehicle sales number, return of product lifecycle and improving chip supplies will help Maruti Suzuki stock fetch good returns from the current levels. Shares of Maruti Suzuki closed at Rs 7852.75 per share on the BSE on Monday.  

Auto bellwether Maruti Suzuki India (MSI) has sold a maximum PVs in the month of May. It emerged as the segment leader with sales of 1,10,602 units in the last month. MSI had logged sales of 36,758 units in the same month last year. 

As for product lineup, the MSI has launched upgraded Celerio, and mid-cycle refresh of Baleno as well as XL6. Going forward, MSIL would be launching: new models (four SUVs), platform upgrade (Alto) and mid-cycle refresh (Brezza).  

Maruti Suzuki target prices

Global brokerage firm Jefferies, which has the most aggressive target for the auto manufacturer giant, sees around 30% upside for Maruti Suzuki on Wednesday's closing.  

Jefferies though accepts that the performance of the company has been weak for the past three years and the margin is at a historical low, but it is of the view that rise in PV sales can help Maruti Suzuki to a great deal.  

The brokerage maintained a buy call on Maruti Suzuki for a target price of Rs 10, 250, a 30.2% upside on yesterday's closing price.  

Another global brokerage firm Credit Suisse maintained an outperform rating on the auto stock with a target price of Rs 10103.  

As per domestic brokerage Motilal Oswal, the recent decline in commodity prices and favorable JPYINR movement can add ~180bp to margins and 17% EPS upgrade for FY24E.  

However, it remains bullish on the fact that Maruti Suzuki is read with exciting product pipeline. 

"After a gap of almost three years, MSIL’s product pipeline has just kickstarted with an exciting line-up of launches over the next 2-2.5 years," it said.  

Saying Strong demand, improving chip supplies, moderating commodity inflation and favorable Fx would support margin recovery of Maruti, Motilal Oswal retained its 'buy' rating with a target price of Rs 10,000 for the auto counter.  

On Thursday, around 1.10 pm, shares of Maruti Suzuki were trading flat at Rs 7854.25 per share on the BSE.