The shares of India’s largest passenger vehicle maker surged roughly 1.7 percent to Rs 10,463.90 per share on Friday’s trade after Citi raised its ‘buy’ recommendation to an upside of 33 percent. 

Maruti Suzuki India Ltd shares were trading at Rs 10,434.55 on the NSE at 11:40 a.m., up Rs 150.25 or 1.46 percent from the previous close. The company’s share has delivered returns of 26 percent in six months and 11 percent in a year. 

The company’s revenue climbed by 22 percent year on year, rising from Rs 26,511 crore in Q1FY23 to Rs 32,338 crore in Q1FY24. During the same time period, net profit increased by 145 percent, from Rs 1,005 crore to Rs 2,463 crore. 

The Company’s Net profit margin increased from 4.20 percent in FY22 to 6.83 percent in FY23, while the operating margin rose from 5.27 percent to 8.78 percent during the same period. 

Based on an optimistic outlook on the largest automaker,Maruti Suzuki. Citi has raised Maruti’s price target to Rs 13,600, representing a 33% increase from Thursday’s closing price. 

The rationale behind providing such a recommendation is 

● The company has achieved an Improving Product Mix. which is characterized by a growing share of utility vehicles (UVs) in the company’s product range. Customers are increasingly shifting towards UVs, which is a major contributor to the company’s optimistic outlook. 

● Success in the company’s recent models has insulated the company from the soft demand for entry-level cars.such as the Grand Vitara, the Fronx, and consistent volumes for the Brezza vehicles. 

● In addition to this, Citi added, Maruti Suzuki’s entry level cars now account for only 57 percent of the financial year 2024 volumes so far. 

“A year back, a decline in small car sales would have been a big negative for Maruti, with mini and compact cars accounting for 70 percent of the first half of the financial year 2023 volumes,” Citi Mentioned.

Written by Omkar Chitnis


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