Maruti Suzuki India shares jump 5% today; here's why

Shares of Maruti Suzuki India Ltd climbed 4.80 per cent in Tuesday's trade to hit a high of Rs 14,073.70. The stock was last seen trading 4.53 per cent higher at Rs 14,038, extending its gains over the past three months to 14.20 per cent.

The latest upmove follows Jefferies' upgrade of the stock to 'Buy' from 'Hold', with an increased target price of Rs 16,500.

In addition, some market experts linked the recent gains to the automaker's focus on cleaner mobility solutions, including the launch of flex-fuel vehicles, as well as softer crude oil prices.

Ravi Singh, Chief Research Officer at Master Capital Services, said, "The biggest reason behind the rally was the sharp fall in crude oil prices after geopolitical tensions eased in the Middle East. Lower crude prices are generally positive for automobile companies as they help improve consumer sentiment and can encourage higher vehicle demand."

He added, "Apart from this, investors also remained optimistic about Maruti's strong position in the passenger vehicle segment and its continued focus on cleaner mobility solutions such as CNG and flex-fuel vehicles. The company is expected to benefit from improving demand conditions if fuel prices remain stable."

Maruti has launched India's first flex-fuel passenger vehicle in the Wagon R variant, a move that has attracted attention amid the evolving automobile landscape. The launch comes as the industry continues to explore alternative fuel technologies and ethanol-based mobility solutions.

Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, highlighted that the new flex-fuel vehicle launch is a positive move for the company. "Maruti understands the entry-level segment and its product positioning. Flex-fuel is likely to be a focus area in the coming quarters and beyond. This could be a game changer for Maruti in this segment from a product-offering perspective," he also said.

Meanwhile, oil prices declined on Tuesday, retreating to levels seen before the onset of the US-Iran conflict. At last check, Brent crude futures were down $0.89, or 1.22 per cent, at $72.26 per barrel, while US West Texas Intermediate (WTI) crude futures fell $0.63, or 0.89 per cent, to $70.12 per barrel.