A rating upgrade by Jefferies drives Maruti Suzuki share price by 1.2%

16 Jun 2022 , 11:26 AM

The stock of Maruti Suzuki India surged 2% in the morning session of June 16 after Jefferies upgraded it to Buy. The worldwide research firm has set a target price of Rs10,250 per share, implying a 28% increase in value. According to Jefferies, earnings will more than triple between FY22 and FY24, and passenger vehicle demand is already high. Over the next three years, the brokerage expects earnings to more than triple, adding that passenger vehicle demand is currently high.

A boost should be provided by a replacement cycle with a preference for personal mobility. Falling metal prices should also help in improving margins that were at a historical low.

At 11:27 am, the stock was trading at Rs7,919, up by Rs65.85 or 1.2%. It has touched an intraday high of Rs8,025.

While the return of the product lifecycle will drive market share recovery (600 basis points by the end of FY24), strong demand, increasing supplies, and stable commodity prices are expected to fuel a 550-basis point increase in Maruti’s operating profit margin, believes Jefferies.