Maruti Suzuki India surges 11% in 2 days, nears 52-week high

The stock was quoting higher for the fourth straight day and trading close to its 52-week high of Rs 8,400 touched on January 13, 2021

Shares of Maruti Suzuki India (MSIL) were up 4 per cent at Rs 8,347 on the BSE in Wednesday’s intra-day trade, surging 11 per cent in past two trading days on media reports that the company has received the state government's approval for setting up a third passenger vehicle manufacturing plant in Haryana in Sonipat district. The stock of car & utility vehicles maker were quoting higher for fourth straight trading day and were trading close to its 52-week high of Rs 8,400 touched on January 13, 2021.

Maruti already has two manufacturing plants in Haryana with a combined annual capacity of around 1.5 million units, which combined with Suzuki's plant in Gujarat takes its effective annual capacity to around 2.25 million units. This is amid around 1.82 million units of sales volume that we expect for MSIL for FY23E, ICICI Securities said in a note. “We are little surprised by the location of the new plant as it is far off from its existing belt in the state i.e. Gurugam, Manesar. We await official communication from the company on the same,” the brokerage firm said.

In October 2021 month, MSIL posted total sales of 138,335 units. Total sales in the month include domestic sales of 112,788 units, sales to other OEM of 4,225 units and its highest ever monthly exports of 21,322 units, the company said. “While the shortage of electronic components continued to affect the production of vehicles during the month, the Company took all possible measures to minimise the impact. Accordingly, the Company sold more vehicles than the sales volume expected at the start of the month, the company said.

Analysts at Prabhudas Lilladher believe that the market leader will likely benefit from shift to personal mobility and increasing demand of CNG vehicles. Going ahead, new product launches and its ability to pass on prices in competitive environment remains the key.

“MSIL should retain the pole position as it plans to launch new products to fill white-spaces and network expansion. In the next 2-3 years, new models could include new Brezza, Jimny UV, Above 4m UV and new MPV. The network has increased to over 3,000 touch points, and the expansion continues,” analysts at Emkay Global Financial Services said in Q2 result update. The brokerage firm remain positive on MSIL due to expectations of a cyclical upturn, which generally lasts for at least three years.