Kia’s entry into India not a threat; CLSA remains bullish on Maruti Suzuki

Even as South Korea’s second-largest automobile manufacturer, Kia Motors is looking to foray into the Indian markets by rolling out its first car by the end of 2019, global research and brokerage firm CLSA says that India’s largest car maker, Maruti Suzukiwill not be affected, given its competitive advantage. The Korean car-maker is looking to make a foray into the Indian markets, and has plans to roll out its first car by the end of 2019.

Korean consortia of auto component manufacturers are set to make approximately USD 1 billion investment in a supply chain for an integrated plant being set up by Kia Motors in Andhra Pradesh, according to news reports. “The company (Maruti Suzuki) has successfully defended its turf against competitors by enhancing its competitive advantages,” said CLSA in the report.

India’s largest car-maker, Maruti Suzuki shares which have already returned more than 48% in the year, have is well poised to return more, according to global research and brokerage firm CLSA. CLSA has a target price of Rs 9,230 on the scrip which was trading at Rs 7,852, down by more than 0.4% since the previous close. The target price of CLSA implies an upside of 17.5% from the current trading price of the shares.

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%.

Maruti Suzuki India Limited