Maruti Suzuki a key stock to watch in Monday's trade | The Financial Express

Maruti Suzuki a key stock to watch in Monday’s trade

Apart from the big ticket investment in EV batteries, the parent company is also planning to set up a new R&D centre coupled with a brand new plant for Marut Suzki in Haryana. But is the market worried about some loss in the auto bellweather’s market share?

Maruti Suzuki a key stock to watch in Monday’s trade
Suzuki is pumping more than Rs 10,400 crore for setting up capacities for electric vehicles and EV batteries in Gujarat making it one of the first of such moves by the carmaker.

If there is one stock that the market will be watching out in trade on August 29 it’s got to be Maruti Suzuki.Prime Minister Narendra Modi laid the foundation of Maruti Suzuki’s new vehicle manufacturing plant at Kharkhoda in Haryana, albeit virtually.

After Gurugram and Manesar, this will be the third plant for the passenger vehicle bellwether. Marking 40 years of Suzuki in India, Prime Minister Narendra Modi also laid the foundation stone of Suzuki’s electric vehicle battery manufacturing plant in Gujarat.

Celebrating 40 years of Suzuki in India, Suzuki Motor Corporation president Toshihiro Suzuki on Sunday announced the setting up of a new company, Suzuki R&D Centre India, a wholly-owned arm of Suzuki Japan. Suzuki in fact, has announced Rs 10,400 crore investment for electric vehicles and EV batteries under the Gujarat Govt’s new EV Policy. The first electric vehicle is expected around 2025-26.Till that time Maruti Suzuki will sell hybrid cars (with a petrol engine and a battery) in India in partnership with Toyota with the first one set to debut next month.

Making a case for Maruti Suzuki’s CNG offerings, RC Bhargava, Chairman and former CEO of Maruti Suzuki said, “Electric alone is not going to do the job in India. Different fuels, CNG, hybrids need to come in, but petrol and diesel should not be encouraged.”

Suzuki is a majority owner of Maruti. Though it continues to be a market leader, it has been facing stiff competition. Maruti Suzuki’s current market share is a tad higher than 40 percent but lower than the 43 percent it accounted for in FY2022. As rising demand for SUVs is eating into the share of entry-level car segment, Bhargava added that, “Loss of market share is good for the company because it jolts us from our comfort zone.”

Suzuki’s total investment in Gujarat including vendors stands at Rs 23000 crore while the total investment in India by the group exceeds Rs 65,000 crore. On a standalone basis, Maruti’s investment is around Rs 50,000 crore, primarily in Haryana.

Suzuki is pumping more than `10,400 crore for setting up capacities for electric vehicles and EV batteries in Gujarat making it one of the first of such moves by the carmaker.

That apart the other good news that augurs well for the stock, that’s garnered over 30 percent gains in the last year, is that most brokerages have a Buy rating on the stock with targets exceeding Rs 9000/share. The current market cap of the company stands at Rs 263,431 crore and the counter is seen as a long-term hold in the market.

As the supply side headwinds begin easing, particularly the semiconductor shortage and raw material prices cooling off, the auto sector earning on an average have seen upgrades across the segment. Bucking the general trend in the market where most sectors have seen lowering of earning estimates as Central banks globally are tackling inflation, auto companies have seen steady earning upgrade.

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