Carmaker Well-Placed To Gain Market Share With New Launches, Say Analysts

The maker of the WagonR and Alto lost market share in the fast-growing SUV segment, where its share is 17% compared with 62% in the non-SUV category, Dolat Capital said in a report. The brokerage sees strong demand for passenger vehicles to continue for the next two years, led by recovery in the economy, a pick-up in replacement demand, long waiting periods for cars and low inventory.

To shore up its volumes, Maruti Suzuki has launched the Grand Vitara, and upgraded the Vitara Brezza, Ertiga and XL6 in a span of four months. The demand for its vehicles is reflected in the 350,000 pending bookings, including 70,000 orders for the Brezza and 20,000 for the Grand Vitara.

Analysts said chip shortage may ease in the coming months, allowing Maruti Suzuki to clear its order book rapidly. The company said it couldn’t produce 51,000 vehicles in quarter ended June due to the chip crunch.

“We believe the chip shortage issue to get resolved well by Q3 FY23, therefore fulfilment of this order book may surely lead to a surge in H2 FY23 and FY24 volumes,” LKP Securities said.

Supply shortages and input cost pressure persisted in the first quarter as Maruti Suzuki’s net profit rose 130% year-on-year but missed estimates.

Shares of Maruti Suzuki rose as much as 1.3% to Rs 8,770.15 apiece in morning trading on Thursday and the stock is on course to gain for the second straight day.

Of the 53 analysts tracking the company, 40 maintain ‘buy’, six suggest ‘hold’ and seven recommend ‘sell’, according to Bloomberg data. The average of target prices suggests an upside potential of 7.3%.