Maruti share price gains about 2% on expansion plans, expected festive season boost

livemint.com:

Maruti Suzuki unveiled its major investment plans of investing as much as $1.25 trillion to develop around 10-11 new models which will also include six electric vehicles and growing its production capacity by 2030-31. In a presentation to investors, analysts and proxy advisors, it said that with the challenges of the last 4 years behind, it is projecting a requirement of 4 million production capacity by 2030-31.

Also Read- Maruti Suzuki eyes ₹1.25 trillion capex to boost EV, SUV play The major challenges faced by the automakers during the past few years included disruptions caused by the pandemic, chip shortages and also rising input costs with surge in commodity prices. The decline in commodity prices is positive for the margins of the companies, while chip shortage situations have also eased.

The volume of companies such as MSIL though have not seen much uptick during the month of September 2023 and total vehicle sales at 173,451 units for MSIL were flat on year-on-year basis. Nevertheless, the upcoming festive season is likely to be the next major catalyst for the company's growth prospects.

The analysts at Prabhudas Lilladher said that “The expectations are high and initial trends for regional festive periods have shown positive momentum, a lot depends on the one-month festive period which starts from mid-October". OEMs (Original Equipment Manufacturers) have built inventory in anticipation of strong growth and higher retails would be key to avoid large inventory backlog post the festive season, they added.