Maruti Suzuki share price hits fresh record high, up 16% in six months; should you buy?

Maruti Suzuki share price rose over 2 per cent to hit its fresh record high of ₹1,0216.65 in intraday trade on BSE on September 1. The stock opened at ₹10,000 against the previous close of ₹10,007.10 but soon gained traction to rise to an all-time high. Around 1 pm, the stock was up 1.43 per cent at ₹10,150.05 on BSE.

On a monthly basis, the stock has been in the green since April this year. In the last six months, this heavyweight stock has gained nearly 16 per cent against a nearly 10 per cent gain in the equity benchmark Sensex.

The stock has been enjoying a bullish run in the recent past primarily because of its robust June quarter numbers, optimism over the company's growth outlook and improved sentiment for the automobile sectors.

In a BSE filing on Friday (September 1), Maruti Suzuki said it sold a total of 189,082 units in August 2023, which is its highest-ever monthly sales volume. "Total sales in the month include domestic sales of 158,678 units, sales to other OEMs (original equipment manufacturers) of 5,790 units and exports of 24,614 units," said Maruti.

Meanwhile, Maruti Chairman R.C. Bhargava said last Tuesday that the company will also be investing ₹45,000 crore to double its production capacity from the existing 2.25 million units to 4 million units in the next seven years.

Read more: Maruti to invest ₹45,000 cr to double capacity by FY31

Maruti Suzuki’s Q1FY24 standalone net profit jumped by a robust 145 per cent to ₹2,485.1 crore as compared to ₹1,012.8 crore in the same quarter last year. This was on account of larger sales volume, improved realization, cost reduction efforts and higher non-operating income.

Mint talked to several analysts to understand the fundamentals and technicals of Maruti stock. Here's what they said:

Fundamental views

Deepak Jasani, Head of Retail Research, HDFC Securities

Over the last three quarters, Maruti Suzuki has been on an aggressive launch spree, having launched four new models, viz., Grand Vitara, Jimny, Fronx and the Invicto, in a bid to recover its lost share in UVs (utility vehicles), which has now recovered to 23 per cent in Q1 (from 17 per cent YoY); Maruti is now again the market leader in UV segment.

Maruti Suzuki outperformed the industry in Q1 (12 per cent YoY growth versus the rest of the industry growth at 7 per cent) and it expects this momentum to continue on the back of its refreshed product portfolio, albeit at slower growth, given a higher base in Q2. The incremental 1,00,000 units of Manesar capacity would be operational by Q4FY24 end.

Maruti Suzuki India expects to invest around ₹45,000 crore to double its production capacity to 40 lakh units annually in the next eight years. Maruti Suzuki has reached "two million production and sales in 40 years and is now preparing to add two million in the next eight years" while also more than doubling the turnover of the company in its third phase of the journey as per its Chairman.

Jasani observed at 31 times trailing-twelve-month EPS (earnings per share), the stock is not cheap but remains a smart play on Indian consumer discretionary spending.

Technical views

Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers

Recently, Maruti took support near 100 DEMA (daily exponential moving average), which was also complemented by Ichimoku cloud support. Since then, Maruti has never looked and broke its all-time high.

"As we advance and sustain above ₹10,000 level on a monthly basis, we may see ₹11,000 in the coming couple of months. On the flip side, if we don’t sustain above ₹10,000, then 9,500 can be seen," said Patel.

Aditya Gaggar, Director of Progressive Shares

Index heavyweight Maruti Suzuki has given a breakout from the Cup and Handle Formation on the monthly chart which is a continuation pattern and at the sametime.

"The auto sector has also given a breakout from a bullish flag and pole formation which then resulted in a joint breakout. Momentum and Trend-following indicators also support price activity. As per the pattern, the targetis ₹14,900," said Gaggar.

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Disclaimer: The views and recommendations above are those of individual analysts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.