Maruti Suzuki shares fell close to a percent on Tuesday even as the Street expects the carmaker to see maximum growth among peers in the margin when compared to the previous quarter. The downtrend in the auto stock comes days ahead of its financial results for the July to September quarter due on October 28.

A CNBC-TV18 poll of analysts believes Maruti Suzuki's margin would jump nearly 200 basis points sequentially. However, brokerage firm CLSA thinks the near-term may be good for India’s largest carmaker but for 2023-2024 fiscal, it has a cloudy outlook on the firm.

“In the near term, passenger vehicle demand is likely to be robust due to pending bookings and strong pent-up demand which will benefit Maruti Suzuki. However, we see industry growth slowing dramatically in FY24 as the increase in interest rates and slowing exports could impact GDP growth and income growth,” it said.

CLSA still has a sell rating on the Maruti stock but has lifted its target price from Rs 7,374 to Rs 7,597 as it raised its industry volume estimates. This means it still expects a 12 percent downside from the stock’s closing price on Wednesday.

The brokerage, however, does not foresee the company gaining market share to justify its “lofty valuation.”

The brokerage has increased the passenger vehicle industry by 6-11 percent over FY23-25 as it believes the sector is likely to post strong growth during the festive season, order backlogs are strong and will sustain strong growth in the second half of the fiscal.

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“We thus estimate passenger vehicle industry volume to grow 28 percent YoY in FY23. This said, the increase in interest rates could lead to a slowdown in discretionary consumption once pent-up demand fades, and thus we expect only 5 percent YoY growth in FY24. We lift our volume assumptions for MSIL 4-5 percent YoY for FY23-24 as we bake-in higher industry growth numbers,” it said.