A Maruti Suzuki car is displayed for sale at a B.R.B. Motorcorp Suzuki showroom in Bhaktapur, Nepal. (Photographer: Prashanth Vishwanathan/Bloomberg)

Maruti Suzuki Just Got Its Most Bullish Target Price Yet

Maruti Suzuki India Ltd.—one of the world’s most expensive auto stock—just got its most bullish target price ever.

Morgan Stanley said the stock could reach Rs 14,400, a potential upside of nearly 60 percent from its Friday's close, as a best-case scenario. This was by far the highest price target put out by any brokerage tracking the stock, Bloomberg data showed.

India’s largest carmaker has gained over 74 percent so far this year, compared to the 26.5 percent advance in the country’s benchmark S&P BSE Sensex index. The stock trades at 36.4 times trailing 12-month earnings per share and 32 times its estimates for the coming year, more expensive than larger global peers like General Motors Co. Ford Motor Co. and Honda Motor Co Ltd.

Morgan Stanley maintained its ‘Overweight’ rating on Maruti and expects its earnings per share to grow at a compounded rate of 22 percent by March 2020.

Among 54 analysts tracked by Bloomberg, 42 analysts have a ‘Buy’ rating on the stock, while 11 analysts have a ‘Hold’ rating and one has a ‘Sell’ call.

What’s Driving The Optimism

The broking firm expects the parent company Suzuki’s partnership with Toyota on electric cars will help Maruti Suzuki further strengthen its position in the domestic market.

“Suzuki is working towards a high localisation. It will make the electric vehicles and that will be sold by Maruti Suzuki,” Morgan Stanley said in a note.

The company’s first electric vehicle by 2020 is likely to have the highest localisation among peer models, thus ensuring better profitability.
Morgan Stanley Research Report