BofA Sees Upside in Maruti Suzuki, Highlights 5 Key Auto Sector Themes
16th Jan 2025
Maruti Suzuki's Growth Drivers
Shares of Maruti Suzuki have been on a winning streak, following an upgrade by BofA Securities. The brokerage lifted the stock's rating to 'Buy' and raised the target price to ₹14,000, implying a potential upside of nearly 16% from the current levels. BofA identified several growth drivers that could support Maruti Suzuki's performance through 2025 and beyond, including new value-accretive utility vehicle (UV) launches, increased export growth, further ramp-up of its Toyota alliance, and a strong foray into the electric vehicle (EV) market.
Stabilizing Trends in the Auto Sector
BofA Securities expects volume growth trends in the auto sector to stabilize at 5-7% annually across sub-segments, supported by evolving market dynamics and structural tailwinds. The brokerage anticipates growth rates of 4-5% year-on-year for Passenger Vehicles (PVs) and Trucks, a slowdown to 6-7% in Two-Wheelers (2Ws), and continued mid-single digit growth in the Tractor segment.
Key Growth Factors for the Auto Industry
The brokerage outlined five pivotal factors shaping the future of the auto sector: Exports, Electric Vehicles (EVs), Economic Recovery, Alliances and Value Unlocking, and Global Risks. Indian automakers are leveraging scale to drive export growth, while the upcoming EV launches are expected to provide significant momentum in the PV segment.
Stock-Specific Updates
BofA reiterated its 'Buy' rating on Mahindra & Mahindra (M&M), citing the company's strong execution in the SUV segment and steady earnings from the tractor cycle. The brokerage retained its 'Neutral' stance on Tata Motors, while reaffirming its 'Buy' rating on Ashok Leyland, driven by a decisive recovery in the commercial vehicle (CV) cycle. In the two-wheeler space, Bajaj Auto was identified as the top pick, while TVS Motor was upgraded to 'Neutral'.
Shares of Maruti Suzuki have been on a winning streak, following an upgrade by BofA Securities. The brokerage lifted the stock's rating to 'Buy' and raised the target price to ₹14,000, implying a potential upside of nearly 16% from the current levels. BofA identified several growth drivers that could support Maruti Suzuki's performance through 2025 and beyond, including new value-accretive utility vehicle (UV) launches, increased export growth, further ramp-up of its Toyota alliance, and a strong foray into the electric vehicle (EV) market.
Stabilizing Trends in the Auto Sector
BofA Securities expects volume growth trends in the auto sector to stabilize at 5-7% annually across sub-segments, supported by evolving market dynamics and structural tailwinds. The brokerage anticipates growth rates of 4-5% year-on-year for Passenger Vehicles (PVs) and Trucks, a slowdown to 6-7% in Two-Wheelers (2Ws), and continued mid-single digit growth in the Tractor segment.
Key Growth Factors for the Auto Industry
The brokerage outlined five pivotal factors shaping the future of the auto sector: Exports, Electric Vehicles (EVs), Economic Recovery, Alliances and Value Unlocking, and Global Risks. Indian automakers are leveraging scale to drive export growth, while the upcoming EV launches are expected to provide significant momentum in the PV segment.
Stock-Specific Updates
BofA reiterated its 'Buy' rating on Mahindra & Mahindra (M&M), citing the company's strong execution in the SUV segment and steady earnings from the tractor cycle. The brokerage retained its 'Neutral' stance on Tata Motors, while reaffirming its 'Buy' rating on Ashok Leyland, driven by a decisive recovery in the commercial vehicle (CV) cycle. In the two-wheeler space, Bajaj Auto was identified as the top pick, while TVS Motor was upgraded to 'Neutral'.