Maruti Suzuki shares up 11% in 5 days: What is driving the rally?

NEW DELHI: Even as most auto stocks have seen selling in recent one week, generating downgrades from analysts, there is one stock that has defied all odds and has surged 11 per cent in the last five sessions.

The stock is

, the largest maker of passenger vehicles in India.

The major reason behind the rally seems to be another price hike that the company is seeking, though it has not announced the quantum of the hike. When announced, it will be the third such hike by the company in this calendar.

The models in which this hike will be effective has not yet been decided. What has been decided though is that a price hike is necessary considering that the input costs have gone up substantially due to the increase in steel and other commodity prices,” said Shashank Srivastava, ED, Maruti Suzuki, in a recent interview to ET Now.

The company in January had increased the prices of its vehicles by roughly about 1 per cent, followed by a 1.3-1.2 per cent hike in April.

The rally in Maruti Suzuki comes at a time when the analysts are downgrading other auto stocks. Ambit Capital recently came out with ‘sell’ recommendations for Bajaj Auto and Hero MotoCorp–both two-wheeler makers.

Ambit believes that these two companies will feel the heat as startups including Ather Energy and Ola Electric are expected to launch electric vehicles in the segment. Many governments, the latest being Gujarat, have come out with incentives to encourage adoption of such vehicles.

Market performance-wise, all peers of Maruti Suzuki have lagged in the recent one week. BSE data show shares from auto block have given 1.5 per cent to minus 3 per cent returns in the period.

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