Maruti Suzuki trades higher for the 4th straight day, hits over 11-mth high

Analysts at Dolat Capital believe the increasing realisation of used cars and recovery in urban demand will aid in faster recovery of replacement demand.

Shares of Maruti Suzuki (India) (MSIL) hit an over 11-month high of Rs 7,510, up 4.3 per cent on the BSE on Thursday. The stock of the passenger vehicles (PV) bellwether was trading higher for the fourth straight day, rising 7 per cent during the period, even as the company’s volumes in November rose at a modest pace by 1.1 per cent to 153,223 units, dragged by a 5 per cent decline in the core mini and compact portfolio.

The stock was trading at its highest level since January 20, 2020. It had hit a 52-week high of Rs 7,566 on January 17, 2020. Despite the past four days' gain, MSIL has underperformed the market in past one month by gaining 8 per cent, as compared to an 11 per cent rally in the S&P BSE Sensex.

Analysts at Emkay Global Financial Services note that MSIL witnessed flat growth in November, owing to supply issues – lower production days, but volume should improve in the January-March quarter of the current fiscal (Q4FY21).

“We expect auto sector volumes to improve in the coming quarters on strong rural sentiment, low-interest rates, improving finance availability, and a gradual pick-up in the business and economic activity. H2 (October-March) wholesales growth should also be aided by a favorable base,” the brokerage firm said in an auto sector update.

Analysts at Dolat Capital believe increasing realisation of used cars and recovery in urban demand will aid in faster recovery of replacement demand. The brokerage firm expects a broad-based long-term demand recovery to be visible from FY22 as GDP growth/job creation rates pick-up.

At 10:11 am, MSIL was trading 4 per cent higher at Rs 7,494 on the BSE, as compared to a 0.32 per cent gain in the S&P BSE Sensex. The trading volumes on the counter jumped nearly three-fold with a combined 1.2 million equity shares changing hands on the NSE and BSE.