Maruti Suzuki Stock: Motilal Oswal Sees 29% Upside Potential

Introduction

Financial services firm Motilal Oswal (MOFSL) has maintained a positive outlook on Maruti Suzuki India Ltd (MSIL), reiterating a 'Buy' rating on the stock. The brokerage suggests that a revival in the automaker's market share could be a primary catalyst for a re-rating. This analysis comes at a time when Maruti Suzuki's stock has underperformed the broader Nifty Auto Index, a trend attributed to weaker wholesale volumes and a mixed performance in the recent December quarter.

Recent Stock Performance and Market Concerns

Over the past six months, shares of Maruti Suzuki have declined by approximately 12%, underperforming the Nifty Auto index by nearly 9%. The stock has also faced short-term pressure, experiencing a six-day consecutive fall that resulted in a cumulative loss of 5.81%. This downturn followed the company's third-quarter financial results, which, despite record domestic sales, raised concerns about margin pressures and valuations. The stock's price-to-earnings (P/E) ratio of 32.42 stands above the industry average of 24.95, suggesting a premium valuation that may have prompted some profit-taking from institutional investors.

Motilal Oswal's Bullish Thesis

According to MOFSL, the prevailing concerns about Maruti Suzuki appear overstated. The brokerage believes the company is positioned to outperform the industry from FY27 onwards, once its near-term capacity constraints are addressed. A new manufacturing facility is expected to come onstream from April, which should resolve supply-side issues that have impacted wholesale volumes. Furthermore, retail demand for MSIL vehicles remains healthy, as indicated by Vahan registration data. The firm also noted that Maruti Suzuki absorbed the impact of a GST rate cut on small cars and the Brezza model to sustain demand, which affected its quarterly performance but supports long-term volume stability.

Key Growth Drivers: Product Pipeline and Exports

A robust pipeline of new product launches is central to the positive outlook. Motilal Oswal highlights several upcoming models expected to drive market share improvement, including a new Brezza variant with a smaller engine, the recently launched e-Vitara, and at least one more new vehicle in FY27. This is in addition to the recently introduced Victoris, which is already experiencing healthy demand.

Exports remain a significant growth engine. MSIL has already surpassed its FY26 export target of 400,000 units as of February 2026. The company is now working towards a medium-term goal of exporting 750,000 to 800,000 vehicles by FY31. MOFSL projects that export volumes will grow at a compound annual growth rate (CAGR) of 25% between FY25 and FY28, supported by the ramp-up of the e-Vitara and Victoris models in international markets.

Financial Projections and Valuation

Motilal Oswal projects a strong financial trajectory for Maruti Suzuki. The brokerage forecasts a 10% volume CAGR and a 16% earnings CAGR for the company over the FY25-28 period. Based on these projections, MOFSL has reiterated its 'Buy' rating with a target price of ₹18,712. This target values the company at 28 times its estimated September 2027 earnings per share (EPS), suggesting a potential upside of around 29% from current levels. Other brokerages like Nuvama and HDFC Securities have also maintained 'Buy' ratings with similar target prices in the ₹18,600-₹18,700 range, citing strong demand and a healthy product pipeline.

Technical Analysis Overview

From a technical standpoint, Maruti Suzuki's stock presents a mixed picture. It continues to trade above its 200-day moving average, which is a long-term bullish indicator. However, it is currently trading below its 5-day, 20-day, 50-day, and 100-day moving averages, signaling short-to-medium-term weakness and downward pressure. The Relative Strength Index (RSI) was recently recorded at 30, a level that often indicates a stock may be oversold, potentially signaling a bottoming-out process.

Market Performance Comparison

The stock's recent performance contrasts with its long-term track record. While it has underperformed the Sensex over the past month and year-to-date, its returns over three, five, and ten years have significantly outpaced the benchmark index. This highlights the company's historical resilience and growth potential within the automobile sector.

Conclusion

Despite recent stock underperformance and short-term technical headwinds, the fundamental outlook for Maruti Suzuki remains strong, according to several brokerage reports. Analysts at Motilal Oswal believe that the company's strategic focus on new model launches, capacity expansion, and aggressive export growth will enable it to regain market share and drive a re-rating of its stock. Investors will be closely watching the company's ability to execute its plans and navigate sectoral challenges to realize the projected growth.