Maruti Suzuki shares up 47% since January: CLSA says Buy

Maruti Suzuki shares which have given stellar returns in the year so far, are still undervalued at these levels says research and brokerage firm CLSA. The shares were trading at Rs 7,838 on Monday morning, and have returned 47% in the year so far. CLSA has a buy rating on the stock with target price of Rs 9,230 per share.

The shares have seen a slight correction in the last one month, down by more than 0.5%. However, in the last three months the scrip has returned nearly 10%. The BSE Sensex is up by by more than 2% in the last three months. Notably, Maruti Suzuki shares have outperformed the index in one, three and five year periods.

The country’s largest car manufacturer, Maruti Suzuki posted its best-ever volume growth at 152,000 units in the domestic market in August, an increase of 27% compared with the same period last year. In the case of Maruti, bumper sales were also witnessed because with the start of its Gujarat plant it has been able to deliver higher number of its popular premium hatchback Baleno. The waiting period for the car, which was a high 25 weeks, has now come down to around 16 weeks. Its recently refurbished Dzire also has seen good demand. This is the reason that its mini segment comprising Alto and WagonR has seen sales decline by 0.2% but was countered by the compact segment which comprises Baleno and Dzire among a few others seeing a growth of 62.4%.

Auto companies continued to post robust sales growth in the domestic market during August as companies despatched large numbers to dealers for stocking ahead of the festival season, which kicks in later on in September with Durga Puja, followed by Diwali next month.

Maruti Suzuki India Limited