Maruti Suzuki Share Price Is In Bull Run

Indian Bull market

Maruti Suzuki India Ltd (NSE:MARUTI) stock surged by more than 75% recently and it seems the share price is in a bull run. Let’s understand the current fundamentals, discounts and trade recommendation.

The analysts are bullish on the stock. The November month sales numbers were in line with analyst expectations. Maruti has 1.54 lakh units during the month, which is higher by 14.1 percent over 1.35 lakh units sold in November 2016. As per CNBC-TV18 poll the sales expected were 1.52 lakh units for November 2017.

Maruti Suzuki Share Price Chart

Maruti Suzuki Share Price Chart

Source: Google Finance

Maruti Suzuki offering Discounts

To increase the volume, MARUTI has increased the discount offered recently on its various vehicle segments to reduce the inventory. Therefore the stock moved up in expectation of rise in sales. However, this step would have a mix impact on the top-line of the company. Meanwhile, the company on its mini car segment has offered increased discount for Alto 800 and WagonR to Rs35,000 each for the month of December. The discount on Alto K10 variants has been increased by Rs 8,000 in December compared to November.

However, the sales of the  mini car segment had fallen by 1.8% YoY in November to 38,204 units. On its compact cars segment, Maruti has offered discount such as Swift, Celerio, and Dzire Tour. As a result, various models of Swift hatchback are available at a discount of up to Rs 30,000, which is an increase of Rs 10,000 from the last month.

Maruti has doubled the discount on the diesel variant of Ertiga utility vehicle to Rs 40,000 in December. The company has raised the discounts on petrol and compressed natural gas variants also.

Impact of Gujarat Election

Political Risk is also an important risk, which the investors see. Recently lot of stocks had a bull run considering it there will be BJP government winning from the election. However, the close fight between BJP and Congress is affecting the stocks linked with the state.

Trade Recommendation

CLSA has recently given a “Buy” on the stock with a price target of 10,000 per share. Morgan Stanley is overweight on the stock and has raised target price to Rs 10,563 (from Rs 9,102 per share). The stock is also expected to rise in short term probably to the Gujarat Election.

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