Maruti Suzuki hits 52-week high as Bank of America ups target by Rs 1000

Shares of Maruti Suzuki hit a fresh 52-week high price of Rs 9,324.75 on Thursday, jumping more than 4 percent in trade. The Street sentiment turned bullish as global investment firm Bank of America Securities revised the target on Maruti Suzuki stock price to Rs 10,500 apiece from a previous Rs 9500, suggesting an upside of more than 10.5 percent or Rs 1,000.

Analysts at the global brokerage believe that Maruti Suzuki is set to make a solid comeback on the back of promising new launches. Not just that, there has been a good response to the new Brezza launch despite premium pricing, which is encouraging. The new Brezza also plus the gap in the mid to premium sports utility vehicles (SUV) space, BofA analysts said in a research note.

"We believe that Maruti’s new models can do well, backed by good design/ feature-rich models, strong brand salience (beyond metro cities) & solid marketing machinery. Co can gain back 5-6 percent market share over next 2 years (4 model launches), thereby driving volume CAGR of 14 percent over F22-25E," the BofA report mentioned.

BofA expects Maruti Suzuki to post a volume compound annual growth rate (CAGR) of 14 percent over the FY22-25 estimate and has revised the revenue by 6-8 percent and earnings per share (EPS) by 9-10 percent.

The booking trends at Maruti Suzuki look strong ahead of the festive season, Maruti Suzuki India’s Executive Director Shashank Srivastava told CNBC-TV18 in an interview on Wednesday.

"I expect the festive season to be strong, provided of course, that we are able to produce vehicles according to the underlying demand pattern.”

India's largest carmaker by market share is also among 12 stock picks by global brokerage Jefferies with a strong margin trend over FY23-24.

Jefferies expects Maruti's EBITDA margin to improve from 6.5 percent in FY22 to 11.8 percent in FY24 (FY11-20 average 12.1 percent).

Analysts at Jefferies believe that margin recovery is driven by first, improving pricing power amid good demand and new launches, second, easing commodity prices and third, operating leverage benefit.

In early late August, domestic brokerage Nirmal Bang included Maruti Suzuki among its top picks among passenger vehicle manufacturers citing a robust new product pipeline amid an overall recovery in the PV segment.

Particularly on the new Grand Vitara, analysts at Nirmal Bang said in a report that, "initial feedback for Maruti Suzuki’s new Grand Vitara SUV has been very promising, with around 70-80 percent of enquiries received for the hybrid variant due to higher fuel economy."

At 11.56 am, Maruti Suzuki stock price was trading at Rs 9272.15, up 3.53 percent on BSE. The benchmark BSE Sensex was down 329 points to trade above the 60,000 level.