Maruti Suzuki stock jumps 3.7% to record high, crosses ₹12,000 mark

In the ongoing year, the company’s shares have recorded a remarkable surge of 16%, outperforming the Nifty Auto index, which registered a 9.80% increase over the same period. Notably, it took the stock a span of 24 trading sessions to surpass the significant ₹12,000 milestone, following its ascent past the ₹11,000 mark on February 14th.

Today’s rally came after the global brokerage firm CLSA stated in its recent note that the company is likely to benefit from the rise in CNG vehicles. The brokerage forecasts indicate a significant uptick in the share of CNG passenger vehicles, expected to climb from 15% in fiscal year 2024 to 22% by fiscal year 2030. 

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This anticipated rise is attributed to the lower operational costs of CNG vehicles in comparison to their Internal Combustion Engine (ICE) counterparts. CLSA predicts that Maruti Suzuki will maintain its dominance in the CNG segment, commanding an impressive market share of 72%. 

Recent analysis shows that CNG prices are approximately 50% lower than petrol and 22% lower than diesel, reinforcing the appeal of CNG vehicles in the current market landscape. In recent years, India has made significant strides towards promoting green mobility, with the government actively managing CNG prices as part of this initiative.

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“With a renewed focus on fuel-efficient models such as CNG/hybrid and a strong line-up for SUVs despite short-term weakness in the hatchback segment, we expect Maruti Suzuki’s performance to be driven by, reshaping of the portfolio driven by SUVs, visibility on EV entry in FY25, and consolidation of SMG. We believe the Greenfield plant in Kharkhoda, Gujarat, and an additional EV line in SMG will create synergy and help the company to secure 4 million capacity by FY2030-31,” said domestic brokerage firm Centrum Broking in its latest note. 

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The brokerage remains upbeat on the company’s operating performance and has kept its ‘buy’ rating on the stock with a target price of ₹15,082 apiece. 

In February, Maruti Suzuki reported a notable 14.6% year-on-year increase in sales volume, reaching 197,491 units. Export figures surged by an impressive 68.1% year-on-year, achieving the highest monthly volume ever recorded at 28,927 units in February 2024. 

Domestically, sales reached 168,544 units, marking an 8.7% increase. The SUV segment experienced substantial growth, with volumes rising by 82.5% to reach 61,234 units, supported by a robust SUV lineup, aggressive marketing initiatives, and the reintroduction of the Brezza in hybrid form. 

Despite a 15.1% decline in volumes, the Mini & Compact segment remained significant, contributing 51.1% to domestic sales, albeit affected by weak rural sentiments.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 20 Mar 2024, 02:24 PM IST