Maintain 'buy' on Maruti - TP Rs.1390 - Geojit BNP Paribas

- Buy rating on Maruti Suzuki is maintained with a target price of Rs.1390. The stock is currently traded in the range of Rs.1367.

- The company launched the new Alto 800 with prices starting at Rs.244,000, almost the same as for the outgoing model.

- The new model has increased fuel efficiency, higher torque and better interior space.

- Alto is Maruti's highest selling brand accounting for about 20-25% of domestic volume.

- The effective price of the new Alto would be about Rs.15000 higher considering the discounts on the outgoing model.

- As the Alto 800 was contributing significantly to overall volumes, the new model launch is expected to benefit blended realizations and margins.

- FY13earnings are expected to get an uplift of 3-5% from this launch.

- Company's entry level segment volume is expected to register flat growth in 2HFY13 compared to the 19% decline in 1HFY13.

- Company has plans to export the new model to Latin American and African countries from Jan. 2013.

- The stock is still attractive at the current valuation and the 'buy' rating is maintained.

- Any additional duty on diesel vehicles, sharp appreciation of the rupee or significant decline in consumer confidence is risks to the target price.

Source : Equity Bulls

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