Maruti Suzuki appeared as one of the top gainers among Nifty 50 in the bear market, up 3% after it received a bullish upgrade from Jefferies, with the brokerage raising its rating to ‘Buy’ from ‘Hold’ and increasing its price target to Rs 16,500 from Rs 13,800, implying a potential upside of about 23% from current levels.

Jefferies said easing macroeconomic concerns, resilient passenger vehicle (PV) demand, lower crude oil prices following easing Middle East tensions and softer metal prices have strengthened the investment case for the automaker. The brokerage also raised its FY27-FY29 earnings per share (EPS) estimates by 2-4% and expects Maruti Suzuki to deliver a 16% EPS CAGR over FY26-FY29.

Jefferies raises industry growth forecast

Jefferies said passenger vehicle demand has remained robust in the first half of calendar year 2026 despite concerns over geopolitical tensions earlier in the year. Registration growth stood at 24% year-on-year during April-June, prompting the brokerage to raise its FY27 passenger vehicle industry growth forecast to 12% from 8%. It retained its expectation of an 8% CAGR for the industry over FY27-FY29.

“The GST cut in Sep-2025 provided a big boost to passenger vehicle demand… Registration growth has remained strong at 24% YoY in Apr-Jun, while easing of Middle East tensions and subsequent correction in crude prices have now reduced the demand risk,” Jefferies said.

Higher volume estimates backed by domestic demand and exports

Reflecting the stronger industry outlook, Jefferies raised its volume estimates for Maruti Suzuki by around 5% over FY27-FY29.

The brokerage now expects the company to deliver a 10% volume CAGR during FY26-FY29, comprising a 9% CAGR in domestic volumes and a 12% CAGR in exports. It also highlighted that exports grew 39% year-on-year during April-May, while the company is expanding manufacturing capacity by around 19% in FY27 with 2.5 lakh units each in Haryana and Gujarat.

Soft commodity prices ease margin pressure

Jefferies said the correction in commodity prices has reduced incremental margin risks for automobile manufacturers.

Aluminium and precious metal prices, which had risen around 50-100% from September-quarter averages to their peaks, have corrected by roughly 20-40%. While higher input costs are still expected to weigh on profitability in the first half of FY27, the brokerage expects Maruti Suzuki’s EBIT margin to remain in the 8.2-9.1% range during FY27-FY29.

SUV expansion to support long-term growth

Jefferies said Maruti Suzuki continues to lose market share as industry demand shifts toward SUVs, with its wholesale passenger vehicle market share declining from 51% in FY19 to 39% in FY26.

To address this, the company plans to launch eight new SUVs by FY31. However, the brokerage expects competition to remain intense as the top four automakers are collectively expected to introduce 36 new models over the next five to six years.

Valuation offers room for re-rating

Jefferies said Maruti Suzuki has underperformed the Nifty 50 by around 16% so far in calendar year 2026, leaving valuations attractive.

The brokerage noted that the stock trades at around 24 times FY27 estimated earnings, slightly below its 10-year average multiple of 26 times. It believes improving demand, earnings upgrades and a healthy volume outlook provide scope for a valuation re-rating.

“We expect healthy 10% volume and 16% EPS CAGR over FY26-29E. After the 16% CYTD underperformance to Nifty-50, the stock is at 24x FY27E PE, which is a slight discount to the last 10-year average of 26x,” Jefferies said.

Conclusion

Jefferies believes Maruti Suzuki is better positioned after easing macroeconomic risks and stronger-than-expected passenger vehicle demand. Expanding capacity, steady export growth and softer input costs support the call for higher earnings. 

Disclaimer: The institutional equity research ratings, target prices, and financial metrics (including volume and EPS CAGRs) outlined in this brokerage report summary for Maruti Suzuki India Limited are for informational and educational purposes only. They do not constitute investment advice, a financial recommendation, or an offer or solicitation to buy, sell, or hold equity shares.

Investments in the automotive sector carry substantial market risks. Financial performance and stock valuations in this industry are highly sensitive to cyclical domestic consumer demand, intense competitive pressures in the SUV and passenger vehicle segments, fluctuations in global commodity prices (such as steel, aluminum, and precious metals), changes in goods and services tax (GST) structures, and macroeconomic variables like fuel prices and interest rates. Readers are strongly advised to perform independent due diligence and consult a SEBI-registered investment advisor or certified financial consultant before making capital allocations based on these projections.

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