On April 23, 2024, Maruti Suzuki’s share prices hit a record price of Rs 12,000 on the NSE (National Stock Exchange). This surge in its share price has been in tandem with the performance of the entire auto sector.
But what is driving this rise in Maruti Suzuki’s shares?
In this blog, we will take a detailed look into the factors that are causing Maruti Suzuki’s share price to rise.
Factors Driving Maruti Suzuki’s Share Prices Rally
Let us understand the factors that are leading to rise in the Maruti Suzuki share price chart:
1. Strong Q4 Results
One of the primary factors fueling the rally in Maruti Suzuki share price is the robust fourth-quarter (Q4 FY24) results, earning a profit of Rs 3,877 crores, a 48% year-on-year rise.
The strong financial performance is based on the company’s solid sales growth and market position, leading to increased investor confidence and driving up the stock price.
2. Impressive Sales Performance
The demand for Maruti Suzuki’s cars is only rising as evidenced by its sales performance in the previous fiscal year. Maruti Suzuki accomplished its highest-ever total sales at 21.35 lakh units for the full fiscal year ending March 31, 2024.
The sales are impressive and demonstrate the market dominance and rising demand for the company’s cars, which increased investor confidence.
3. Capacity Expansion
The other major reason that has fuelled the rally in Maruti Suzuki shares is the increase in the manufacturing capacity of its plants. They added an additional capacity of 100,000 units per annum at its Manesar plant.
The production capacity at Manesar now goes up to 900,000 vehicles per year with this expansion. This reaffirms that India’s most valuable car manufacturer is leaving no stone unturned to meet the high demand.
4. Price Revisions of Key Models
Maruti Suzuki has also made some changes to the prices of its popular models, which is likely to push profitability. The hike in prices for the Swift, one of Maruti’s best-selling sub-4-metre cars, will be up to ₹25,000. Likewise, the Suzuki Grand Vitara Sigma variant, a high-end SUV, saw its price go up ₹19,000.
The price increases will allow the company to make even more money, thus convincing investors that the company is going to improve its profitability.
5. Broader Market Trends and Economic Factors
The rally in Maruti Suzuki shares is also supported by broader market trends and positive economic factors. Investor appetite for the automobile sector has been evident in the Nifty Auto index, which has soared 69% in the past year.
This trend has been fueled by factors such as a recovery in the rural market, stabilization in raw material prices, and generally positive economic indicators. Also, the strong growth in the Indian economy and a rising per capita income of the consumer are working in favor of auto stocks, and this will be beneficial for Maruti Suzuki too.
6. Government Policies and Future Outlook
The encouraging government policies related to electric vehicles (EVs) have also served to make Maruti Suzuki even more attractive. The company is poised to benefit from the government’s EV push under programs such as the National Electric Mobility Mission Plan (NEMMP).
The larger picture for the auto sector is bullish, and new-model rollouts, stable fuel prices, and ongoing economic expansion should support continued strength.
Conclusion
In conclusion, the rally in Maruti Suzuki shares can be attributed to a combination of strong sales performance, the anticipation of robust Q4 results, strategic capacity expansion, price revisions of key models, and favorable market and economic conditions.
As the company continues to demonstrate its market leadership and adaptability, the positive sentiment among investors is likely to be sustained, keeping Maruti Suzuki’s shares in the limelight. With a promising future outlook, Maruti Suzuki remains a key player to watch in the automobile sector.
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