Why did Maruti Suzuki Share Price Jump Today - All you need to know

Maruti Suzuki

Compared to flat returns of NIFTY50 in the last one month, Maruti Suzuki shares have given nearly 9% returns to the investors. Today, the shares are up by 1%, while major indices are trading flat. Let us look at the reasons for the rally and the target price for the shares.

Why is Maruti Suzuki's share price increasing?

Maruti Suzuki shares are trading near six-week highs. Below are some reasons for the same:

  • The company has kick-started upgrades of key models, and the firm is on the cusp of new models. 
  • There is a strong demand, improving supplies, and stable commodity prices. These will improve the operating profit margin which will reflect in the upcoming quarterly results.
  • New launches- The company has lined up exciting launches over the next 24 to 30 months. It has already launched upgraded Celerio, and done a mid-cycle refresh of Baleno and XL6. It would be launching new models, going for a platform upgrade (Alto), and doing a mid-cycle refresh (Brezza).
  • SUV Launch - The company plans to launch four new SUV brands over the next couple of years to plug in the gaps in the portfolio. Maruti is planning to replicate its highly successful product laddering strategy in the SUV segment, thereby giving customers an option of an SUV at every price point.

Brokerage radar

Motilal Oswal Securities - The brokerage firm has given a BUY call on the stock with a target price of Rs 10,000. As per the firm, the return of product lifecycle will drive recovery by 600 bps by FY24, and strong demand will add 550 bps to margins. The recent decline in commodity prices and favourable yen-rupee movement can add 180 basis points to margins and a 17% earnings per share (EPS) upgrade for FY24. The export business, strong CNG product portfolio, and cost control measures coupled with steady price hikes have led to improvement in margins over recent quarters and helped the company tackle external cost pressures.

Other brokerage updates

  • UBS - It maintained a BUY rating and kept a target price of Rs 10,000. 
  • Credit Suisse - It has maintained an OUTPERFORM rating with a target price of Rs 10,103 
  • Nomura Research - The firm has a NEUTRAL rating with a target of Rs 8,627.

The share was trading at Rs 7,879.15, up 0.87% on Wednesday’s afternoon.