Motilal Oswal Financial Services maintains a BUY recommendation on Maruti Suzuki India (MSIL) with a target price of Rs17,406, implying a potential upside of roughly 29% from the current market price of Rs13,497. The brokerage believes the company’s recent stock underperformance is temporary and largely linked to near-term wholesale weakness and a softer quarterly performance. Structural drivers—including a strong new vehicle launch pipeline, recovery in small car demand after GST cuts, rising export momentum, and capacity expansion from FY27 onward—are expected to drive earnings growth. Analysts project 16% earnings CAGR over FY25–FY28, with improved market share and product launches likely to trigger a re-rating of the stock.

Market Share Recovery Could Trigger Stock Re-Rating

Short-term underperformance masks structural strength. Maruti Suzuki’s recent stock underperformance versus the auto index is attributed mainly to weaker wholesale dispatches and a disappointing third-quarter performance. However, the underlying demand picture remains robust.

Retail sales data indicate strong consumer demand across both passenger cars and utility vehicles. The brokerage notes that the company has actually outperformed the broader industry in retail sales following GST rate reductions, signaling that consumer appetite for Maruti vehicles remains healthy.

The primary constraint currently affecting the company is production capacity, which has limited wholesale supply despite healthy retail demand. This bottleneck is expected to ease from April 2026 onward, when new capacity comes online.

Motilal Oswal therefore expects Maruti Suzuki to outperform industry growth in FY27 and beyond, supported by:

New product launches

Capacity expansion

Export growth

Improved vehicle mix

Strong Product Pipeline to Drive Future Volumes

Multiple vehicle launches are expected to strengthen Maruti’s market position. The company has lined up a robust pipeline of products that could meaningfully expand its market share in both the passenger vehicle and SUV segments.

Key upcoming and recently launched models include:

Victoris SUV, introduced in FY25

e-Vitara electric SUV

Brezza facelift, expected soon

At least one additional model launch in FY27

The Victoris model in particular has already demonstrated strong traction, selling over 50,000 units within the first five months of launch. Positioned between the Brezza and Grand Vitara, the SUV targets customers seeking a full-size SUV experience at an aggressive entry price.

The vehicle features:

6 airbags as standard

5-star safety ratings

Advanced driver assistance systems (ADAS)

Pricing ranging from Rs10.5 lakh to Rs19.9 lakh

The model has helped Maruti expand volumes without significantly cannibalizing existing SUV sales.

Brezza Facelift Could Provide Additional Growth Catalyst

The upcoming Brezza upgrade may significantly improve competitiveness.

Industry reports suggest that the next-generation Brezza could feature a smaller turbo-petrol engine, allowing the model to qualify for a lower 18% GST slab instead of the current 40% bracket.

This shift would enable Maruti to price the model more competitively against rivals such as compact SUVs.

Possible upgrades include:

Turbo-petrol engine option

Six-speed manual transmission

Larger infotainment display

Ventilated seats and premium interiors

Under-body CNG tank layout preserving boot space

Even without these upgrades, Brezza continues to sell roughly 15,000 units per month, underscoring strong demand for the model.

Electric Vehicle Strategy Gains Momentum with e-Vitara

Maruti’s electric vehicle strategy is gaining traction through the newly launched e-Vitara.

The EV has been introduced with a Battery-as-a-Service (BaaS) model designed to lower upfront purchase costs for customers. Under this program, buyers can purchase the car at a reduced price and pay separately for battery usage.

Key highlights of the e-Vitara include:

Range of 543 km

Battery packs up to 61 kWh

ADAS Level 2 safety features

Eight-year battery warranty

Guaranteed buyback options

Customers also receive incentives such as:

Free 7.4 kW AC charger installation

One year of complimentary charging across the company’s network

This strategy significantly reduces the barriers to EV adoption and could position Maruti competitively against rival electric SUVs.

Exports Emerging as a Major Growth Engine

Global demand is increasingly becoming a major growth driver for Maruti Suzuki.

Over the past five years, the company’s export volumes have grown rapidly, lifting the export contribution from 6.5% of sales to roughly 15%.

Several factors are supporting this trend:

Suzuki’s strategic shift of global production to India

Access to Toyota’s global distribution network

Competitive manufacturing costs in India

Major export models include:

Fronx

Jimny

Baleno

Swift

Dzire

Exports are expected to grow at a 25% volume CAGR between FY25 and FY28. The company aims to increase exports to 750,000–800,000 vehicles annually by FY31, more than double current levels.

Capacity Expansion to Unlock Growth from FY27

New manufacturing facilities are expected to remove current production bottlenecks.

Maruti currently faces supply limitations due to operating at peak capacity. However, several manufacturing expansions are underway:

Kharkhoda plant Phase 2, expected to begin operations in April 2026

A fourth production line at the Gujarat facility

A dedicated EV production line with 250,000 units annual capacity

These expansions should significantly boost production capacity and allow the company to meet strong demand in both domestic and export markets.

Financial Outlook and Key Projections

The brokerage expects steady improvement in Maruti Suzuki’s financial performance over the next few years.

The brokerage forecasts:

16% earnings CAGR between FY25 and FY28

EBITDA margins gradually improving as input costs stabilize

Volume growth supported by SUVs, EVs, and exports.

Valuation and Investment Outlook

Despite its strong fundamentals, the stock has recently underperformed the auto sector.

Over the past six months:

Maruti Suzuki stock declined around 12%

The stock lagged the broader Nifty Auto index by roughly 9%

Analysts believe this correction presents an attractive entry point for long-term investors.

Current valuation metrics include:

23.4x FY27 earnings

19.3x FY28 earnings

EV/EBITDA of 13.8x for FY27

Given the company’s improving product pipeline, export momentum, and market share recovery, the brokerage believes the stock is well positioned for a re-rating.