Japanese auto major Suzuki Motor Corporation (SMC) has increased its stake in Indian subsidiary Maruti Suzuki India Ltd (MSIL) to 56.48 percent by purchasing shares from the open market.

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Suzuki acquired 3.45 lakh shares of Maruti worth Rs 300 crore from the open market. The last instance of Suzuki purchasing stake in Maruti was back in June 2020.

Suzuki signed a joint venture agreement with Maruti Udyog, the predecessor of Maruti Suzuki in 1982 and rolled out its first car — Maruti 800 — in December 1983.

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An increase in stake from promoters usually increases confidence of investors in a stock.

Maruti targets recovering back its lost market share in the UV segment with a focus to regain SUV market leadership in the next financial year.

The company's recent launches of Grand Vitara, Jimny and Fronx are seeing good demand and are expected to aid its UV market share improvement.

What also augurs well for Maruti is the BS-VI Phase II transition, which is likely to further shift customer preference towards diesel variants.

Maruti is also targeting multiple fuels to achieve its emission targets with its first Electric Vehicle likely to be launched in 2025.

Brokerage firm Citi has highlighted Maruti Suzuki as its top pick in the auto sector. The brokerage believes that the company's market share has bottomed out and that it would receive a boost from the new UV models.

Citi also expects the semi-conductor supply chain issues to ease over the slightly longer term. "However, possible introduction of the mandatory 6-airbag norm (currently in draft stage) could result in higher costs for entry-level hatchbacks," the note said.

EV launches from financial year 2025, followed by hybrids, flex fuel and CNG, will be the key focus areas to reduce emissions, according to Citi. The brokerage has a price target of Rs 12,500 on Maruti.

Shares of Maruti Suzuki are trading 1.7 percent higher at Rs 8,658.

(Edited by : Hormaz Fatakia)

First Published:Mar 14, 2023 4:57 PM IST