Maruti Suzuki: Nuvama shares target price as eVitara production kicks off

Nuvama Institutional Equities has reaffirmed its 'Buy' rating on Maruti Suzuki India Ltd (MSIL), setting a target price of Rs 14,300. This comes as the automotive giant embarks on the production of its inaugural electric vehicle (EV), the eVitara, marking a significant step in the company’s evolution towards sustainable mobility.

The new EV, eVitara, is being produced at Maruti Suzuki's SMG plant in Gujarat. The plant, which has an annual capacity of 0.75 million units, is set to expand to 1 million units by FY27. This expansion will feature a new line that is fungible across various powertrains, including internal combustion engines (ICE), EVs, and hybrids, ensuring adaptability and state-of-the-art automation with IoT 4.0 technology.

A substantial investment of Rs 2,200 crore has been made towards the production of the eVitara, which is slated to be sold in over 100 countries, including major markets such as Europe, Japan, and India. The production target is set at over 70,000 units in the first year, ensuring a robust market presence right from the onset.

The launch of eVitara highlights Maruti Suzuki's commitment to electrification and innovation. The model boasts a range of advanced features, including a digital cockpit, seven airbags, and multiple drive modes, supported by battery options offering ranges beyond 500 km. The introduction of a rebadged version, the Toyota Urban Cruiser EV, is also imminent, broadening the reach of this new platform.

Nuvama's endorsement, alongside the Rs 14,300 target, underscores an optimistic outlook for Maruti Suzuki. "Nuvama maintained its ‘Buy’ rating on Maruti Suzuki and suggested a target price of Rs 14,300." This reflects confidence in the brand's strategic direction and its potential for profit growth, particularly as the eVitara will be sold on a cost-plus basis to ensure profitability at the EBIT level.

TDS Lithium-Ion Battery Gujarat Pvt Ltd (TDSG), a Suzuki group enterprise, plays a crucial role in this strategy. TDSG has invested Rs 4,270 crore and plans to expand its cell production capacity from 18 million to 30 million cells, catering to hybrid vehicles. This expansion is central to supporting Maruti Suzuki’s hybrid and EV ambitions, reinforcing its competitive edge in the market.

The implications of this development are significant for Maruti Suzuki’s global positioning. By leveraging partnerships with industry giants like Toyota and Diahatsu, the company is poised to strengthen its foothold in the EV segment, which is rapidly expanding worldwide.

Looking ahead, Maruti Suzuki’s focus on localisation, with 80% localisation achieved for hybrid cells, positions the company to mitigate import dependencies and optimise production costs. This strategy will likely enhance its competitive advantage in both domestic and international markets, setting a strong foundation for future growth.

Maruti Suzuki’s strategic initiatives, reflected in the ambitious rollout of eVitara, align with global shifts towards greener technologies. This development not only bolsters its market position but also signifies a broader industry transition towards sustainable and innovative automotive solutions.