Maruti Suzuki gains 11% in 4 days after Co announced price hike plan

Analysts said there is a healthy order-book and adequate finance availability which should support a demand rebound

Shares of Maruti Suzuki India (MSIL) hit an over four-month high of Rs 7,664, on the back of an 11 per cent rally in four days, after the company announced price hike plan. The stock, which was trading at its highest level since February 17, 2021, was up nearly 2 per cent on the BSE in intra-day trade on Friday.

The car & utility vehicles company said on Monday that it would be raising vehicle prices in the July-September quarter (Q2FY22) to pass on higher input costs. The company, however, has not disclosed quantum of the increase.

"Over the past year, the cost of the Company's vehicles continued to be adversely impacted due to increase in various input costs. Hence, it has become imperative for the Company to pass on some impact of the above additional cost to customers through a price rise," Maruti Suzuki said in exchange filing. The company further said that the price rise has been planned in quarter 2 and the increase shall vary for different models.

Meanwhile, analysts at Emkay Global Financial Services believe income levels of upper middle class households have been less impacted by the pandemic, resulting in pent-up demand during lockdowns, which should drive a swift recovery in the automobile sector going ahead. There is also a healthy order-book and adequate finance availability which should support a demand rebound. They expect the industry upturn to last for next 5 years, and industry to reach 4.5 million units by FY26.

"Customer sentiments have been impacted by Covid-19 lockdowns and increasing fuel prices, resulting in preference toward more affordable and better fuel-efficient vehicles in the near term, which is an area of strength for MSIL and Hyundai. We expect MSIL to sustain share in the near-term," the brokerage added.

At 03:08 pm, Maruti Suzuki was trading 1.5 per cent higher at Rs 7,640 on the BSE, as compared to a 0.44 per cent rise in the S&P BSE Sensex. A combined around 1.15 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.