One of world’s best auto stock hits all-time high, still a buy

By: | Updated: December 8, 2017 12:51 PM

The shares of India's largest car-maker have returned more than 70% since January.

Mutual Fund Investment in India, Top 10 mutual funds for long-term gains, top mutual funds to become rich, Aditya Birla Sun Life Frontline Equity, DSP BlackRock Micro Cap, Franklin India Bluechip, HDFC EquityMaruti Suzuki India shares have risen by more than 70% since January. (Image: FE Graphic)

While it may be difficult for investors to sift through loads of data to gauge best performing stocks globally,  top fund manager, Nilesh Shah of Kotak MF says that the world’s best performing automobile stock is in India. In an interview to CNBC TV18, Nilesh Shah, Managing Director of Kotak AMC said that in his recent visit to Japan, he used the Indian car manufacturer Maruti Suzuki’s rise to explain the country’s potential.

“I carried just one chart with me, and said, I can explain India in hundred slides or I can explain India in one slide. I compared Maruti Suzuki India‘s performance with Honda, Toyota, Nissan, General Motors, Ford and all the listed companies, and said that look, the world’s best performing automobile stock is in the Indian market, and this is how Suzuki has made money in India. Surprisingly, they were not aware of this story and they all lapped it up,” he told the channel.

Track live stock price: Maruti Suzuki India

The shares hit a new high today to cross the Rs 9,000 mark. The shares were trading at Rs 9,079 this morning on NSE, up by more than 2% since the previous close. Notably, the shares have risen by more than 70% since January. CLSA has a target price of Rs 10,000 on the shares, implying an upside of more than 10% from the current market prices.

CLSA says that the company is in a sweet spot as easing of competition in small cars and entry level sedans is a positive. Further, the global firm observed that the company is likely to broaden its SUV portfolio in the coming years. CLSA says that the valuation looks justified given higher results visibility, and better longer-term outlook.

India’s largest car-maker had reported a a 14.3% rise in total domestic passenger vehicle to 1,44,297 units in November 2017. The company has registered a strong volume increase in domestic utility vehicles segment under by 34% to 23,072 units. This increase is backed by an increase in demand for Vitara Brezza, S-Cross, Ertiga and others. The overall domestic sales under all categories grew by 15% to 1,45,300 units in November, 2017 from 1,26,220 units in November, 2016. The export sales remained stable as compared to corresponding month of previous year at 9,300 units.

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