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UBS sees 35% upside in Maruti Suzuki stock; here's why

UBS sees 35% upside in Maruti Suzuki stock; here's why

International brokerage UBS is bullish on Maruti Suzuki with a target price of Rs 12,000. The new target amounts to a 35.28% upside over the previous close of Rs 8,870.55

Maruti Suzuki stock has risen 14.23% in a year and risen 20.7% in 2022. Market cap of the automaker rose to Rs 2.70 lakh crore Maruti Suzuki stock has risen 14.23% in a year and risen 20.7% in 2022. Market cap of the automaker rose to Rs 2.70 lakh crore

Shares of India's largest carmaker Maruti Suzuki India were in focus today after the investment bank gave a buy call to the company with an upside of 35%. Shares of Maruti Suzuki gained 1.05% to Rs 8964.55 today against the previous close of Rs 8870.55 on BSE. Maruti Suzuki shares are trading higher than 100 day and 200 day moving averages but lower than 5-day, 20-day and 50-day moving averages. The large cap stock has risen 14.23% in a year and risen 20.7% in 2022. At 10:19 am, 3179 shares of the firm changed hands amounting to a turnover of Rs 2.84 crore on BSE. Market cap of the automaker rose to Rs 2.70 lakh crore.

On NSE, 1.34 lakh shares of Maruti Suzuki changed hands amounting to a turnover of Rs 120.33 crore. Market cap of the firm rose to Rs 2.70 lakh crore.

International brokerage UBS is bullish on Maruti Suzuki with a target price of Rs 12,000. The new target amounts to a 35.28% upside over the previous close of Rs 8,870.55

UBS said Maruti will emerge as the biggest winner as diesel vehicles go off the road. Real-world Driving Emission (RDE) norms will go live from April 1, 2023. More stringent norms will follow and are expected to further increase relative cost of diesel cars in India, the brokerage said, adding that diesel vehicles account for 33% of industry's demand.

Maruti has almost zero exposure to diesel vehicles and expected shiftaway from the diesel segment is a big positive for Maruti, UBS said.

Real-world Driving Emission (RDE) norms will ensure that the automobile companies coverd under them measure pollutants emitted from a vehicle in a real-world driving scenario. A Portable Emissions Measurement System (PEMS) will be used for this purpose.

Europe was the first in the world to implement such regulations. According to RDE norms, all diesel vehicles will require having Selective Catalytic Reduction (SCR) systems, which will lead to additional costs for carmakers and be likely too costly for some smaller vehicles.

Meanwhile, Maruti Suzuki logged a four-fold rise in net profit at Rs 2,061.50 crore in the September quarter compared with a profit of Rs 475.30 crore in the corresponding quarter last year. Sales climbed 47.91 per cent year-on-year (YoY) to Rs 28,543.50 crore from Rs 19,297.80 crore in the corresponding quarter last year.

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