On the back of development plans and anticipated holiday season growth, Maruti share price increases by roughly 2%

 On the back of development plans and anticipated holiday season growth, Maruti share price increases by roughly 2%

In Tuesday's early morning transactions, the share price of Maruti Suzuki India (MSIL) increased by as much as 1.57%. Investor confidence in the company's long-term prospects was reinforced by the news flow regarding its investments for expanding its electric car line, introducing new models, and raising its total production capacity. Additionally, there are still high hopes for the next holiday season, which is expected to increase sales and the company's profits in the short term.

Maruti Suzuki disclosed its significant investment plans, which include spending up to $1.25 trillion to build around 10–11 new models, six of which will be electrified cars, and to increase its production capacity by 2030–31. It stated in a presentation to investors, analysts, and proxy advisors that it is estimating a necessity for 4 million production capacity by 2030–31, having overcome the difficulties of the previous four years.

Pandemic-related disruptions, chip shortages, and growing input costs due to a rise in commodity prices were among the primary difficulties experienced by the auto industry in recent years. The margins of the corporations are benefiting from the drop in material prices, and chip shortages have also subsided.

However, the volume of businesses like MSIL did not significantly increase in September 2023, and the company's overall car sales, at 173,451 units, were flat on an annual basis. However, the approaching holiday season is probably going to be the next significant trigger for the company's development ambitions.

The one-month festive period that begins in mid-October is extremely important, according to Prabhudas Lilladher analysts, who stated that "the expectations are high and initial trends for regional festive periods have shown positive momentum." Higher retail sales would be essential to prevent having a significant inventory backlog after the holiday season, they continued, therefore OEMs (original equipment manufacturers) have increased inventories in anticipation of robust growth.

According to recent channel checks by experts at Axis Securities, they anticipate that during the holiday season, retail demand for Maruti in passenger vehicles will be higher than peers.

Additionally, a strong increase in net earnings for the quarter ending in September 2023 is anticipated from the corporation. The Jefferies India Private Limited analysts predict a 45% increase in net profit for MSIL in the second quarter. Increasing Sport Utility sales for Maruti in its portfolio, in their opinion, is a positive step in improving product mix.

According to observers, MSIL has been quietly preparing for the EV market and will introduce its first model in FY25. This will improve possibilities for medium- to long-term growth.