Global brokerage firm Nomura remains bullish on the shares of Maruti Suzuki, after India’s largest car-maker signed a pact to with Toyota Motor Corporation to roll out electric cars in India.
Global brokerage firm Nomura remains bullish on the shares of Maruti Suzuki, after India’s largest car-maker signed a pact to with Toyota Motor Corporation to roll out electric cars in India. On Friday, the Japanese car-maker entered into an in-principle agreement with Maruti Suzuki to consider a joint structure for the introduction of electric cars in India in 2020. The Indian car-manufacturer’s parent Suzuki said in a statement, “ Suzuki will manufacture electric cars for India and supply some units to Toyota,” adding that Toyota will also provide technical support. Further, both companies plan to incentivize the acceptance of electric vehicles in India by conducting studies on car charging stations, training of technicians, and systems for the disposal of electric car batteries.
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Nomura has raised the target price on the shares of Maruti Suzuki to Rs 9,843. The shares were trading at Rs 8.417, up by more than 0.8%. Nomura’s target price implies an upside of more than 16.5% from the current market prices. Maruti Suzuki India shares have returned more than 56% in the year so far. Credit Suisse said that the tie-up for electric vehicles with Toyota may bode well for the company. Nomura says that company may be able to achieve a growth of 12-14% over the next few years.
Suzuki’s tie-up with Toyota signals that the Indian automobile market is set for a wave of disruption as vehicle makers take heed of a government warning that they have no option but to abandon diesel and petrol. India Inc is planning a huge energy reset, as the heavyweight companies including Reliance Industries, Hero Motocorp, and Adani are readying plans to enter battery manufacturing and battery pack assembly with investments running into several billion dollars over the next decade. In September this year, Suzuki announced that it will invest Rs 1,150 crore together with Japanese partners Toshiba and Denso Corp. to set up a Lithium-Ion battery facility in Gujarat. According to the company arrangement, Suzuki will own 50%, Toshiba 40%, and Denso 10% of the joint venture that will make batteries and battery packs for Indian car maker Maruti Suzuki and export to Suzuki.