Maruti Suzuki Emerges as Top Nifty Gainer Amid Citi and Morgan Stanley’s Bullish Outlook

Maruti Suzuki India’s shares made a notable gain of 1.6 percent, reaching Rs 10,460 per share during Friday’s trading session, making it one of the standout performers on both the Sensex and Nifty 50 indices in an otherwise lackluster market. This surge was attributed to the favorable assessments provided by global brokerage firms Citi and Morgan Stanley.

Despite the S&P BSE Sensex remaining relatively flat at 66,273 levels as of 10:40 am, the auto sector witnessed a resurgence, with the S&P BSE Auto index bouncing back by 1 percent from its daily low. Maruti Suzuki led the pack, accompanied by other industry players like M&M, Hero MotoCorp, Ashok Leyland, and Tata Motors.

Morgan Stanley maintained an “overweight” rating for Maruti Suzuki India, setting a target price of Rs 11,963 per share. According to the brokerage firm, Maruti’s business recovery is proceeding as expected, with notable gains in the sport utility vehicle (SUV) market share and volume recovery. They anticipate that the Ebitda margin will increase to 11 percent in the July-September quarter of fiscal year 2023-24 (Q2FY24), up from 10 percent in Q1FY24.

Furthermore, Morgan Stanley highlighted the attractive forward-looking valuation of Maruti Suzuki, with a FY25 price-to-earnings (P/E) ratio of 23x. This stands in contrast to the 10-year median 12-month forward P/E ratio of 25x, suggesting that the stock may be currently undervalued compared to historical standards.

On the other hand, Citi analysts issued a “buy” recommendation for Maruti Suzuki, raising the target price to Rs 13,600 per share. They pointed to encouraging trends in the product mix, emphasizing the positive impact of a higher proportion of utility vehicles (UVs) on overall earnings. Notably, the success of recent models has shielded the company from soft demand in entry-level cars, which now account for nearly 57 percent of FY24 year-to-date (YTD) volumes.

In August 2023, Maruti Suzuki’s total domestic sales surged by 14 percent year-on-year (YoY), reaching 1.6 lakh units, up from 1.4 lakh units in the same period the previous year. The mini segment, including models like Alto and S-Presso, saw a 45 percent YoY decline. However, the compact segment, which comprises Baleno, Celerio, Dzire, Ignis, Swift, Tour S, and WagonR, recorded a 1.2 percent YoY increase. Notably, the sale of utility vehicles, encompassing models such as Brezza, Ertiga, Fronx, Grand Vitara, Invicto, Jimny, S-Cross, and XL6, saw a remarkable 118 percent YoY surge in August 2023.

Moreover, Maruti Suzuki’s total export sales also witnessed a notable increase of 14.5 percent, reaching 24,614 units in August 2023, up from 21,481 units in August 2022.

In summary, Maruti Suzuki India’s strong performance in the market is bolstered by optimistic assessments from leading global brokerages, underlining the company’s resilience and potential for growth in the evolving automotive landscape.

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