Maruti Suzuki Shares Surge as UP Waives Hybrid Car Registration Fees
Contents
Maruti Suzuki stock price hybrid car incentives
Brokerages Bullish on Maruti Suzuki Following UP Government’s Hybrid Car Tax Waiver
Morgan Stanley has assigned an Overweight rating to Maruti Suzuki with a target price of Rs 14,105 per share. The brokerage highlighted that the policy support from the Uttar Pradesh government suggests a diversified portfolio of powertrains is the best strategy in the automotive sector.
The UP government’s registration fee waiver could reduce the on-road price of hybrid cars by up to Rs 4 lakh, significantly benefiting Maruti Suzuki, which offers hybrid features in many of its models.
On July 10, Maruti Suzuki shares extended gains following a 6.5 percent surge the previous day, driven by positive sentiment from multiple brokerages after the UP government’s registration fee waiver announcement. The stock rose over 3 percent to hit an all-time high of Rs 13,285 on the National Stock Exchange (NSE).
Citi analysts also viewed the tax waiver as a positive development for Maruti, Toyota, and Honda. They expect Maruti to benefit significantly, potentially leading to more hybrid model launches. Citi maintains a Buy rating on Maruti with a target price of Rs 15,100 per share, considering it their top sector pick and anticipating further volume growth if other states follow UP’s lead.
Morgan Stanley reiterated its Overweight rating on Maruti with a target price of Rs 14,105 per share. The brokerage emphasized that the policy support indicates a diversified portfolio of powertrains is the best strategy in the sector. They noted that the sizable incentive by the UP government could inspire other states to adopt similar measures, thereby justifying a premium valuation for a diversified powertrain portfolio.
Macquarie maintained a Neutral rating on Maruti with a target price of Rs 11,565 per share. The reduction in road tax on strong hybrid vehicles by the UP government is seen as a positive sentiment for the company. The policy reduces the price premium for strong hybrids over internal combustion engine (ICE) vehicles to 10 percent from 20 percent.
Estimates suggest that the registration waiver could reduce the on-road price of hybrid cars by up to Rs 4 lakh. Maruti Suzuki, which offers hybrid features in many of its models, is expected to benefit significantly.
UP’s Tax Relief for Hybrids
In an effort to promote green mobility, the Uttar Pradesh government announced a 100 percent registration fee waiver on strong hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs). Uttar Pradesh contributed 10 percent to passenger vehicle sales in India in FY24, compared to 11 percent of Maruti’s domestic sales, where the company’s market share in the state was 44 percent versus 42 percent nationally.
In the previous session, Maruti Suzuki shares ended 6.5 percent higher at Rs 12,807 on the NSE. So far this year, the stock has soared 24 percent, outperforming Nifty’s 12 percent return during the same period. Over the last year, the stock has risen 31 percent, compared to Nifty’s 26 percent return.
conclusion
The UP government’s registration fee waiver on hybrid vehicles has significantly boosted Maruti Suzuki’s stock performance and market sentiment. With multiple brokerages, including Morgan Stanley and Citi, giving bullish ratings, the policy change is expected to lead to more hybrid model launches and increased sales. This positive outlook, combined with the substantial tax relief, highlights the growing importance of hybrid technology in the automotive sector and underscores Maruti’s strategic advantage. As a result, Maruti Suzuki is well-positioned for continued growth and market leadership in the hybrid vehicle segment.
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