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Maruti Suzuki stock hits 12-week high; rallies nearly 4% on healthy outlook

Stock rides high on December's strong volumes and positive market sentiment

Maruti Suzuki

Deepak KorgaonkarRam Prasad Sahu Mumbai

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Shares of the country’s largest passenger vehicle (PV) maker, Maruti Suzuki India (MSIL), hit a 12-week high of Rs 12,194.5, gaining nearly 4 per cent on the BSE in Wednesday’s intraday trade. The PV major ended the day 1.7 per cent higher at Rs 11,940.6. In comparison, the BSE Sensex ended 0.29 per cent higher, while the BSE Auto index fell 0.53 per cent. The stock has also outperformed the market this month, riding on robust volumes in December and a positive outlook from brokerages.
 
Dispatches to dealers in December were up 29.6 per cent year-on-year (Y-o-Y) at 178,000 units. Exports witnessed double-digit volume growth with an increase of 39.2 per cent Y-o-Y at 37,419 units. A positive for the company is the higher sales in the entry-level segment, which accounted for 44 per cent of domestic sales in December. The segment saw a growth of 29 per cent Y-o-Y. While the midsize segment declined by 5.1 per cent, utility vehicle sales maintained their momentum with a 21 per cent rise to over 55,000 units.
 
 
Analyst Amit Dhameja of Centrum Broking points out that MSIL’s strategy of consistent new launches, export expansion highlighted by achieving 3 million cumulative exports, and efforts to normalise inventory levels contributed to its volume growth and robust sales performance. In addition to this, higher year-end discounts, coupled with the anticipation of a price hike from January this year, also contributed to MSIL achieving record retail sales of 252,000 units.
 
The brokerage, which has a ‘buy’ rating, believes that the long-term growth drivers remain intact, given the strong growth in sports utility vehicles (SUVs), increasing penetration of units based on compressed natural gas, a surge in exports, and the company’s electric vehicle foray by the end of 2024-25.
 
IIFL Research highlights that a pickup in small car volumes would be a big positive for MSIL. Given its higher market share in the non-SUV market (65 per cent), the company has lost overall share due to the industry shift to SUVs. If entry-level, first-time car buyers return to the market, MSIL will start regaining share, say analysts at the brokerage, led by Joseph George. The first concrete signs of recovery in the PV industry would drive a rerating, he says.
 
The stock is the top pick of IIFL Research, given that the risk/reward is now favourable after a year of sharp underperformance. With the sharp correction in the stock over the past three/four months and considerable underperformance in 2024 (up 5 per cent versus Nifty Auto gains of 23 per cent), the risk/reward is quite favourable, says the brokerage. The stock is trading at 23x 2025-26 earnings, which is at a discount to its history and 10 per cent cheaper than the automobile original equipment manufacturer basket in India.
 
While analysts at Emkay Global Financial Services remain cautious on the overall PV space (weak underlying fundamentals, intensifying competition in electric vehicles), the brokerage firm said they prefer MSIL on a relative basis, due to emerging green shoots in small cars, relatively better launch visibility (seven-seater SUV in the second half of 2025), and undemanding valuation (below long-term average on a one-year forward basis). The stock trades at 22x its core earnings (September 2025-26), compared to 27x for Mahindra & Mahindra and 23x for Hyundai Motor India. 
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First Published: Jan 15 2025 | 10:52 AM IST

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