Buy Maruti Shares For Near 20% Upside, Says Motilal Oswal

Motilal Oswal is betting on the stock of Maruti Suzuki for a near 20% upside on the stock.

New Brezza launched

Maruti launched its all new Brezza, with the latest advanced features, at an ex-showroom price of INR0.8m for the manual variants (INR1.1m for the automatic variants). While the base variant of the new Brezza is dearer by INR15k, the price of premium variants has risen by INR119-232k. Prices for the AT variants are dearer by INR84-247k.

Motilal Oswal's take on the stock

Brezza is the first of many new platforms and SUV launches planned over the next two years. Considering that the Brezza was the oldest model in the hyper-competitive UVC segment, this platform upgrade was timely. It will help MSIL recover part of its lost market share in this important SUV segment. We are building in average monthly domestic volumes (including supplies to Toyota) of ~15k units in FY24 v/s 11.7k units in FY22.

Valuations and view on the Maruti stock

According to Motilal Oswal, strong demand, improving semiconductor supplies, moderating commodity inflation, and a favorable forex rate will aid a margin recovery. "Robust demand and strong recoveries in both market share (+600bp) and margin (+550bp) over FY22-24E, will drive a 66% CAGR in EPS. The stock trades at 36.9x/23.9x FY23E/FY24E consolidated EPS. We maintain our Buy rating with a target price of Rs 10,000 per share (premised on 27x Jun'24E consolidated EPS)," the brokerage has said.

New Brezza could be a blockbuster

Speaking at the launch of the new Brezza, Hisashi Takeuchi, MD & CEO, MSIL, said, "Conceptualized, designed, and developed in India, the Brezza, with its stylish design, bold stance, and unmistakable road presence, has redefined the Compact SUV segment in India. The Brezza is the most loved Compact SUV, with over 7,50,000 delighted customers. It has ruled the sales charts by consistently being among the top 10 bestselling Passenger Vehicles. The Brezza has captured the imagination of customers looking for a stylish SUV to match their personality. We are delighted to present the 'all new hot and techy Brezza' with energetic new design, packed with next-gen features, and superior performance, which will surely surpass customer expectations. We are confident that the all new Brezza will be a blockbuster once again."