Active Stocks
Fri Apr 19 2024 15:56:00
  1. Tata Steel share price
  2. 162.10 1.31%
  1. Tata Motors share price
  2. 963.20 -0.84%
  1. NTPC share price
  2. 350.90 -0.14%
  1. ITC share price
  2. 424.80 1.40%
  1. Power Grid Corporation Of India share price
  2. 281.70 0.54%
Business News/ Markets / Stock Markets/  Maruti Suzuki shares: JM Financial raises target price as trend seems shifting to hybrid vehicles amid EV deceleration
BackBack

Maruti Suzuki shares: JM Financial raises target price as trend seems shifting to hybrid vehicles amid EV deceleration

Maruti Suzuki India is working on multiple technologies, such as Hybrids, EVs, Flex-fuel and Biogas in addition to ICE and CNG as the company believes multiple technologies can co-exist in the medium-to-long term.

JM Financial maintained a ‘Buy’ rating on Maruti Suzuki shares and raised the target price to ₹13,000 per share from ₹12,250 earlierPremium
JM Financial maintained a ‘Buy’ rating on Maruti Suzuki shares and raised the target price to 13,000 per share from 12,250 earlier

Maruti Suzuki India, the largest passenger car manufacturer in India, is likely to be a key beneficiary as the customer preference seems to be slowly shifting towards hybrid vehicles from electric vehicles (EVs), analysts said.

The pace of adoption of EVs seems to be slowing down due to challenges like lack of adequate charging infrastructure, long charging time and customers being hesitant to pay a premium over ICE vehicles.

Global automakers like Mercedes, Ford, GM, VW have deferred EV related investments, reduced their EV sales guidance indicating moderation in EV growth going ahead. Few of these auto OEMs are turning their focus back to Hybrids amidst shifting consumer preference, JM Financial noted.

Also Read: Stocks to buy: Maruti Suzuki, M&M, TVS Motor among top picks in auto sector by HDFC Securities

Similar trend is being witnessed in the domestic demand scenario for electric passenger vehicles (PV). Recently, Tata Motors has reduced its FY24 EV sales estimate by 20% to 75,000 - 80,000 units and also cut prices by upto 1.25 lakh per vehicle to drive wider adoption. 

Meanwhile, Maruti Suzuki India is working on multiple technologies, such as Hybrids, EVs, Flex-fuel and Biogas in addition to ICE and CNG as the company believes multiple technologies can co-exist in the medium-to-long term. 

“The company had a foresight back then (when it launched CNG) and we believe its current tech-agnostic approach is again a well thought-out approach against committing resources to a single technology," JM Financial said.

Reports suggest that Maruti Suzuki is developing its own cost-effective ‘series’ hybrid solution for the small car segment and will continue to source Toyota’s Hybrid technology for larger SUVs and MPVs. It plans to launch five Hybrid models over the next 2-3 years. 

Also Read: Wipro shares trading at expensive valuation, offer little margin of safety, says Kotak Equities; downgrades to ‘Sell’

As per JM Financial’s calculation, currently with 43% GST, the Total Cost of Ownership (TCO) of a mid-sized EV-SUV is 10% higher than Strong Hybrid Grand Vitara. It believes the rationalisation of GST rate can reduce TCO of a Strong Hybrid Grand Vitara by another 8% and that would bring it almost at par with compact EV-SUV.

“Tax rationalization on Hybrids could act as a fillip and shift consumer preference towards this choice of powertrain. Given the evolving global landscape and Maruti Suzuki’s tech-agnostic approach, we remain positive on the company," JM Financial said.

The brokerage firm maintained a ‘Buy’ rating on Maruti Suzuki shares and raised the target price to 13,000 per share from 12,250 earlier, implying an upside of over 13% from Tuesday’s closing price.

At 12:30 pm, Maruti Suzuki shares were trading 2.21% lower at 11,248.50 apiece on the BSE.

Catch Stock Market Live Updates here

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

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 28 Feb 2024, 12:31 PM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App