Can Maruti Suzuki India shares drive past Rs 10,000 mark? Here's what brokerages say

Shares of Maruti Suzuki India Ltd (MSIL) have gained 12.41 per cent in 2023 so far. The stock, in the previous session on Friday, settled 0.56 per cent higher at Rs 8,589.90, extending its climb for the fourth consecutive session. In April, Maruti sold a total of 1,60,529 units, up 6.55 per cent from 1,50,661 units in the same month last year. "Total sales in the month include domestic sales of 1,39,519 units, sales to other OEM (Original equipment manufacturer) of 4,039 units and exports of 16,971 units," the carmaker stated.

The country's biggest carmaker reported a 42.70 per cent jump (year-on-year) in its March quarter profit at Rs 2,624 crore, due to strong demand for passenger vehicles. Hybrid variants of the new Grand Vitara contributed to around 35-40 per cent of the total demand, a brokerage said. It expected the demand to continue, given the new launches and an aggressive push for alternate fuel technologies. Maruti launched its compact SUV Fronx last month and the carmaker would bring out the off-roader 5-door Jimny in May.

In Q4 FY23, Maruti's revenue surged 20.80 per cent to Rs 30,822 crore. Also, MSIL announced a dividend of Rs 90 per share, a payout of 1,800 per cent given the face value of Rs 5 per share, for the financial year 2022-23 (FY23).

At Friday's closing price of Rs 8,589.90, the stock has slipped 12.07 per cent from its one-year high of Rs 9,768.65, a level seen on October 31, 2022. Yet, the counter has gained 21.62 per cent from its 52-week low of Rs 7,062.65, hit on May 13 last year.

Brokerage view on Maruti:

At least five brokerages have given a 'Buy' call on the counter suggesting a Rs 10,000-plus target price over a 12-month period. Two of them, however, lowered their target prices.

Prabhudas Lilladher said, "Going ahead, Maruti hopes to outgrow the PV industry's growth led by its SUV portfolio, increased traction from CNG models and servicing stronger order book. We remain positive about MSIL's growth prospects. We have a revised target price of Rs 10,300 (Rs 10,600 earlier) at 26x Mar-25E EPS."

LKP Securities said, "With the ability to combat competition coming from the EV shift and better growth in rural markets, the company is poised for healthy growth hereon. With multiple positive drivers in place, we remain sanguine on the stock with an FY25E target of Rs 10,034."

"Vehicular demand in Q4 FY23 grew by 5.30 per cent year-on-year (YoY) driven by new launches. The demand for strong hybrid variants of the new launches like Grand Vitara was around 35-40 per cent of the total demand. On April 24, 2023, MSIL launched Fronx, while Jimny will be launched in May. The company also unveiled recently the Wagon-R Flex Fuel Vehicle, which is India's first mass-segment Flex Fuel prototype car," LKP added.

The current momentum in volumes is to continue through FY24 and percolate down to FY25 on rising demand for new launches and alternate fuel technologies in which MSIL is getting aggressive, the brokerage further said.

In addition, Maruti plans to launch its first electric in FY24-25. Although, this is a space where its peers have outperformed.

Choice Broking said, "MSIL has revamped its product line to include more fuel-efficient and low-emission vehicles, such as the introduction of CNG and Hybrid technology, and the plan thus far appears to be successful. To restore its market share in the UV category, we expect MSIL may introduce a hybrid-based technology in more models. MSIL now offers around 14 CNG-based models/variants of its existing portfolio, which is the industry's largest offering."

The brokerage has recommended an 'Outperform' rating on the counter with a target price of Rs 10,331 over the next 12 months.

YES Securities has assigned an 'Add' rating on the stock with a revised target price of Rs 10,051 (Rs 10,605 earlier).

JM Financial Institutional Securities said, "Healthy order book and operating leverage tailwinds will further support strong performance going ahead." It has pegged the stock at a fair value of Rs 11,200.

Technical view:

Support on the counter could be seen at Rs 8,400.

Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, said, "The stock has witnessed a short correction after resisting near the significant 200-DMA (Day Moving Average) level of Rs 8,725 with an indication of bottoming out near the Rs 8,420 level forming a higher bottom pattern on the daily charts with improved bias. Some pullback can be expected but only a decisive move past the 200-DMA zone can improve the overall trend to anticipate a further rise. With the support at Rs 8,400, one can hold on to the stock and expect an upward move."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "The stock has been trading in the tight zone of Rs 8,400-8,600. One needs to wait and watch for breakouts above Rs 8,600. If a breakout happens on the upper side, then the target would be Rs 8,750. On the flip side, it may hit the Rs 8,250 zone in the near term."

AR Ramachandran from Tips2trades said, "The stock has support at around Rs 8,400 level."

Meanwhile, Indian equity benchmarks remained closed today on account of Maharashtra Day. In the previous session, the domestic benchmarks extended their gains for the seventh straight session. The 30-share benchmark Sensex pack surged 463 points, or 0.76 per cent, to settle at 61,112 on Friday, while the broader NSE Nifty index closed 150 points, or 0.84 per cent, up at 18,065. The domestic indices would resume trading on Tuesday.

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