Buy Maruti Suzuki: Stock price may jump 7% in 3 months, breakout from 4-month consolidation signals up move

Maruti Suzuki share price gained nearly one per cent to Rs 8,699.8 apiece from day’s low on Thursday. The stock hit a 52-week high of Rs 9,022 in February. Analysts at ICICI Direct Research expect a 7 per cent rally in the stock price in the coming three months as it remained resilient amid recent market corrections. The brokerage firm said that the stock has witnessed breakout from four months consolidation which signals resumption of up move and fresh entry opportunity. 

ICICI Direct has pegged a target price of Rs 9,250 apiece for three-months, with a stop loss of Rs 7,740 apiece. It said that the auto and auto ancillary space extended its outperformance as the Nifty Auto index is poised for a breakout above its multi year highs since CY17. “Within large cap auto, we remain positive on Maruti,” it added.

Technical charts suggested that Maruti Suzuki stock has held above its 52 week’s EMA since August 2020 and formed a higher low suggesting inherent strength at elevated buying demand. “We expect the stock to extend the current up move and head towards Rs 9250 levels in the coming months as it is the measuring implication of four months range breakout (Rs 8300-7200=1100) added to Rs 8300,” it said.

Also, the weekly RSI recently generated a buy signal moving above its nine period’s average. Thus, it validates the positive bias, the research firm noted. It highlighted that Maruti Suzuki is steadily moving up the technology ladder with interesting new age offerings in the form of new Baleno as well as new Ertiga, XL6 and Brezza. “The company is also approaching the alternate fuel scheme through aggressive push towards CNG vehicles which are gaining traction in the market place amidst high fuel prices,” it said. The company sold over 2.3 lakh units of CNG powered vehicles in FY22, highest ever, with present penetration pegged at ~15%, which ICICI direct expects to inch up, going forward. 

On the EV front, its cautious approach remains with the first EV slated to be launched by 2025. To address the competition in the SUV space, the company has recently launched a new Brezza with mid size SUV expected to be launched during the current month – a product out of Suzuki and Toyota partnership. With exciting product launches in the offering its aims to regain lost market and ultimate command 50% market share, going forward.

Moreover, the Maruti Suzuki company is also likely to benefit from recent appreciation of the rupee versus JPY (Japanese Yen) as well as recent correction in metal prices. At CMP the company currently trades at 26x P/E on FY24E EPS of Rs 321 per share, it said.

The stock recommendation in this story is by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.

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