Buy Maruti Suzuki: Share price could jump 7% in 3 months, breakout of 4-month consolidation signals upside

Maruti Suzuki share price gained nearly one percent to Rs 8,699.8 apiece from Thursday’s daily low. The stock hit a 52-week high of 9,022 rupees in February. Analysts at ICICI Direct Research expect the share price to rise 7% over the next three months as it has remained resilient in the face of recent market corrections. The brokerage said the stock broke after four months of consolidation, signaling a resumption of the upside and a new entry opportunity.

ICICI Direct has set a target price of Rs 9,250 each for three months, with a stop loss of Rs 7,740 each. He said the automotive and automotive auxiliary space extended its outperformance as the Nifty Auto index is on course to surpass its multi-year highs since CY17. “Within large-cap automotive, we remain positive on Maruti,” he added.

Technical charts suggest that Maruti Suzuki stock has held above its 52-week EMA since August 2020 and formed a higher low suggesting inherent strength in high buying demand. “We expect the stock to extend the current rise and head towards the Rs 9250 levels in the coming months as this is the measuring implication of a breakout of the four-month range ( Rs 8300-7200=1100) added to Rs 8300,” he said.

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Additionally, the weekly RSI recently generated a buy signal moving above its nine-period average. Thus, this validates the positive bias, the research firm noted. He pointed out that Maruti Suzuki is steadily moving up the technology ladder with exciting new-era offerings in the form of new Balenos as well as new Ertiga, XL6 and Brezza. “The company is also addressing the alternative fuel program by aggressively pushing CNG vehicles which are gaining traction in the market amid high fuel prices,” he said. The company sold over 2.3 lakh units of CNG-powered vehicles in FY22, the highest on record, with current penetration pegged at around 15%, which ICICI direct expects to achieve. increase in the future.

On the electric vehicle front, its cautious approach remains with the first electric vehicle expected to be launched by 2025. To face competition in the SUV space, the company recently launched a new Brezza with a size SUV medium which should be launched during the current month – a product resulting from the partnership Suzuki and Toyota. With exciting product launches in the pipeline, its goal is to regain the lost market and control 50% market share in the future.

Additionally, Maruti Suzuki should also benefit from the recent appreciation of the Rupee against the JPY (Japanese Yen) as well as the recent correction in metal prices. At CMP, the company is currently trading at 26x P/E on FY24E EPS of Rs 321 per share, he said.

The stock recommendation in this story comes from the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for their investment advice. Capital market investments are subject to rules and regulations. Please consult your investment advisor before investing.

Karen J. Nelson