Reality Check: Maruti Suzuki: Zooming ahead

The Maruti Suzuki stock touched ₹10,000 intra-day on December 20. After the note ban exercise resulted in some correction towards the end of 2016, the stock has been on a dream run this year, moving up 78 per cent since January 1, 2017. A richer product portfolio veering towards bigger cars such as the Vitara Brezza, S-Cross and Ciaz improved realisations. Uptick in both urban and rural demand and lower borrowing costs brought in good volumes despite hiccups such as the GST implementation. The opening of Suzuki’s Gujarat facility eased capacity constraints and hence long wait periods for certain models. Maruti improved its market share to 50.4 per cent for April-November 2017, from 47.4 per cent for the year-ended March 2017. The company also announced its electric vehicle foray. Given the bull ran, the stock’s valuation has expanded from about 28 times the trailing 12-month earnings a year ago to about 39 times now. However, it remains a good bet, given the strong prospects.

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