Business News/ Markets / Stock Markets/  Maruti Suzuki's Brezza launch keeps Motilal Oswal bullish on the auto stock

Carmaker Maruti Suzuki India has launched its all new Brezza, with the latest advanced features, and a price starting from 7.99 lakh (ex-showroom) as it seeks to strengthen its presence in the SUV segment to reinforce its leadership position. It has already garnered more than 45k bookings in the first eight days since bookings were opened.

The new Maruti Brezza will be competing with the likes of Hyundai Venue, Kia Sonet, Tata Nexon, M&M XUV300, etc. in the UVC category. The UVC segment constitutes 54% of SUV volumes for the industry (~40% including MPVs) for FY22.

"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," said brokerage Motilal Oswal in a note.

The domestic brokerage and research firm has maintained its Buy rating on Maruti Suzuki shares with a target price of 10,000 per share. The auto stock is up more than 11% in 2022 (YTD) so far.

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, the note stated. 

“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," Motilal Oswal added.

The company, along with its vendor partners, have Invested 7.6 b on the development of the new Brezza. The management indicated changing consumer buying behavior towards vehicle purchase. As part of the company's vision of providing 'Joy of mobility' to as many people as possible, the automaker said it will strengthen its presence across segments, with special focus on SUV portfolio.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint

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Updated: 01 Jul 2022, 03:29 PM IST
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