1. Maruti Suzuki Ltd
| Industry | Automobiles – Passenger Cars |
| Breakout level on the monthly chart | Above 10,000 |
| RSI (14) level on the lower panel | Above 65 |
| CMP | 10,716 |
| Support range for downside protection | 10,000 – 9,300 |
| Potential upside targets | 11,700 and 12,300 |
| Upside Potential (%) | 15% |
| Horizon | 9-12 months |
Fundamental Rationale
Maruti Suzuki India (MSIL) presents a compelling case supported by below mentioned key factors:
- Steady Growth in the Indian PV Industry: The company anticipates a consistent 6% Compound Annual Growth Rate (CAGR) for the domestic Passenger Vehicle (PV) industry until FY31, signalling long-term stability. In FY24, the company aims to outpace the market’s growth rate, further highlighting its competitive position.
- Export Expansion: The company expects to witness remarkable export growth, with projections of export volumes reaching 750k-800k units by FY31, reflecting a CAGR of 14-15%. This expansion underscores MSIL’s global appeal and potential for international market share gains.
- Capacity Expansion: The company is committed to increasing its production capacity, aiming to add 2 million units within nine years. This significant capacity expansion will accommodate the production of an extensive range of car models and facilitate sales growth.
- SUV Market Leadership: It has strategically targeted leadership in the Sports Utility Vehicle (SUV) segment by FY24. A robust product portfolio, including the successful launches of Brezza, Grand Vitara, Jimny, and Fronx supports this objective. Market leadership in the SUV category is pivotal to its overall growth strategy.
- Electric Vehicle (EV) Entry: The company is actively preparing to launch its first EV in FY25, with six EV models contributing 15-20% of total sales by FY31. MSIL’s foray into EVs positions it well in the evolving automotive landscape.
- Clean Fuels and Carbon Reduction: It is committed to reducing its carbon footprint by focusing on Compressed Natural Gas (CNG) and other clean fuels. The expansion of CNG offerings has already resulted in substantial growth, and the company is exploring various green technologies.
- Digital Transformation: MSIL enhances customer convenience through digitalization efforts, allowing customers to engage with the brand online, including financing and virtual showroom experiences. This customer-centric approach strengthens brand loyalty and market presence.
- Financial Strength: The company demonstrated robust financial performance, with significant growth in revenue, EBITDA, and adjusted profit after tax (adj. PAT) for FY23. This financial stability supports future growth and expansion plans.
- Infrastructure and Sustainability Initiatives: MSIL is investing in infrastructure projects, expanding its reach in non-urban markets, and implementing sustainability measures, such as railway siding projects, recycling, and energy-efficient transportation.
Given these promising developments, strategic initiatives, and a positive financial outlook, we adopt a bullish outlook on
Maruti Suzuki India’s stock. The company’s commitment to growth, technological innovation, and sustainability places it in a favourable position for continued success in the automotive industry.
Even the financial performance of Maruti Suzuki continues to demonstrate robust strength, further supporting our positive outlook for the company.
| Aspect | Q1 2023 Figures | Growth/Change |
| Consolidated Net Profit | ₹ 2,525.20 crore | Over 2-fold increase |
| Consolidated Total Income | ₹ 33,316.90 crore | 25.29% growth |
| Revenue from Operations | ₹ 32,338.50 crore | 21.98% increase |
| Other Income | ₹ 978.40 crore | 12-fold surge |
| Total Expenses | ₹ 30,147.70 crore | 19.27% increase |
| EBITDA (Operating Profit) | ₹ 2,985.10 crore | 55.89% increase |
| Total Vehicles Sold | 4,98,030 vehicles | Strong performance |
| Standalone Net Profit | ₹ 2,485.10 crore | Over 2-fold increase |
| Standalone Total Income | ₹ 33,328.10 crore | 25.35% growth |
Source: Company Financials
Technical Rationale
- On the monthly chart, MARUTI exhibits a pattern of higher highs and higher lows, which has been in place since April 2020. During this period, the stock has delivered an impressive return of over 100%. Notably, there has been a recent breakout above the 10,000 level, marking a significant development in the stock’s performance and suggesting a strengthening trend.
- Examining the momentum oscillator RSI (14) on the lower panel, we observe it is firmly situated in a bullish range shift zone. Additionally, it has broken through a horizontal trend line above the 65 levels, signaling a potential bullish crossover. The moving averages play a crucial role by supporting the stock’s price movements.
- Overall, the indicators and oscillators point toward a “buy-on-dip” strategy, particularly in the weekly and monthly time frames. Looking at potential downside protection, there is a support range between 10,000 and 9,300, which coincides with retested levels of the bullish pattern. This support range acts as a safety net for bullish investors, underlining the continued strength in buying interest.
- Regarding future upside targets, the stock has the potential to reach previously uncharted territory at 11,700 and 12,300 levels. These targets are derived from the breakout and the sustained upward trend, offering an optimistic outlook for the stock’s performance.
| Invest Now |
| View Complete Report |
2. Balkrishna Industries Ltd
| Industry | Tyres & Allied |
| Breakout Type | Triangle Pattern |
| Volume Surge During Breakout | Significant |
| Prices Above Upper Pattern Boundary | Yes |
| Correction Phase Type | Sideways Timewise |
| CMP | 2531 |
| Support | 2300-2200 |
| Potential upside targets | 2750 & 2900 |
| Upside Potential (%) | 15% |
| Horizon | 9-12 months |
Fundamental Rationale
- Consistent Revenue Growth: The company has shown steady revenue growth over the years. Its diversified product mix and expanding market presence bolstered this revenue growth. This growth in earnings is expected to continue as market conditions stabilize.
- Improved Profit Margins: As indicated by its profit margins, the company’s profitability has seen improvement. Management’s focus on cost management and operational efficiency drives these positive changes.
- Healthy Liquidity Position: BIL maintains a healthy liquidity position, which is vital for funding future growth initiatives, including capacity expansion plans.
- Manageable Debt Levels: The company’s debt levels are within manageable limits, contributing to its financial stability.
- Strategic Capital Allocation for FY24: In FY24, the company plans to allocate an estimated capital expenditure (Capex) budget ranging between Rs. 550-600 crore. A substantial portion of this budget, approximately Rs. 250-300 crore will be directed towards routine maintenance Capex to ensure operational efficiency.
The remaining capital, however, will be strategically invested in initiatives pivotal to the company’s growth trajectory. This includes the development of new product lines, such as rubber tracks and giant solid tires, designed to diversify the product portfolio and cater to a broader spectrum of end markets. Furthermore, a significant portion of Capex will be dedicated to intensifying brand-building endeavours and marketing initiatives, which are instrumental in achieving the ambitious objective of securing a 10% market share within the next 3-4 years.
- Navigating Challenges Amid Heat Waves and Export Concerns In the second quarter, a blend of challenges emerged due to scorching heat waves and concerns about economic downturns in export destinations. However, it is worth noting that global inventory challenges in the supply chain are gradually subsiding. On a brighter note, the momentum in domestic markets remains steadfast, showcasing resilience and a potential counterbalance to external headwinds.
A Promising Outlook for Balkrishna Industries:
The company is poised for favourable prospects in the foreseeable future. The remarkable recovery in Agri tire exports, surpassing the CY23 average by approximately 10% in July 2023, is set to bolster the company significantly. This development holds promise for BIL, given that Agri tires constitute roughly 65% of its product portfolio. Moreover, its limited exposure to the United States, representing less than 20% of its revenue composition, strategically positions the company amidst the backdrop of challenging export dynamics. This unique combination of factors adds an appealing dimension to BIL’s outlook.
Prominent Trends Enhancing Our Positive Outlook
- FII/FPI have increased holdings from 12.40% to 12.53% in Sep 2023 qtr.
- Mutual Funds have increased holdings from 12.39% to 12.66% in Sep 2023 qtr.
- Institutional Investors have increased holdings from 33.40% to 33.74% in Sep 2023 qtr.
Technical Rationale
- The stock recently exhibited a breakout on its monthly chart, accompanied by a substantial surge in trading volumes. A triangle pattern characterizes this breakout, and the stock’s prices have effectively maintained their position above the upper boundary of this pattern. This signals a probable extension of the preceding upward trend following a brief consolidation phase.
- After the breakout, the stock has entered a time-wise correction phase with a sideways movement. Remarkably, it has comfortably held its position above the pattern’s neckline. Examining the lower panel, the momentum oscillator RSI (14) has broken out of a descending wedge pattern and is presently hovering near the 60 level, indicating a bullish crossover.
- An array of indicators and oscillators pertaining to the stock is aligning to suggest an attractive “buy-on-dips” opportunity. These metrics consistently read above the polarity levels, reaffirming the prevailing bullish sentiment. On the downside, a supportive range is discerned between 2300 and 2200, corresponding to retested levels within the bullish pattern. This support range serves as a reassuring buffer for bullish investors and underscores the resilience of buying interest.
- Turning our attention to potential upside targets, the stock exhibits promising prospects for attaining higher price levels, conceivably falling within the range of 2750 to 2900. These targets are derived from the breakout and the anticipated continuation of the upward trajectory, painting a sanguine picture of the stock’s future performance.
| Invest Now |
| View Complete Report |
Disclaimer: This document is not intended for anyone other than the recipient. The contents of this document may not be reproduced or further distributed to any person or entity, whether in whole or in part, for any purpose. If you have received the publication in error please notify the sender immediately. If you are not the named addressee, you should not disseminate, distribute or copy this document. You are hereby notified that disclosing, copying, distributing or taking any action in reliance on the contents of this information is strictly prohibited. All non-authorised reproduction or use of this document will be the responsibility of the user and may lead to legal proceedings. This document has no contractual value and is not and should not be construed as advice or as an offer or the solicitation of an offer or a recommendation to take action in consonance in any jurisdiction. Finwizard Technology Private Limited (“Fisdom”) makes no guarantee, representation or warranty and accepts no responsibility or liability for the accuracy or completeness of the information and/or opinions contained in this document, including any third party information obtained from sources it believes to be reliable but which has not been independently verified. In no event will Fisdom be liable for any damages, losses or liabilities including without limitation, direct or indirect, special, incidental, consequential damages, losses or liabilities, in connection with your use of this document or your reliance on or use or inability to use the information contained in this document, even if you advise us of the possibility of such damages, losses or expenses. Fisdom does not undertake any obligation to issue any further publications or update the contents of this document. The information stated and/or opinion(s) expressed herein are expressed solely as general commentary for general information purposes only and do not constitute advice, solicitation or recommendation to act upon thereof. Fisdom does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information contained within this document has not been reviewed in the light of your personal circumstances. Please note that this information is neither intended to aid in decision making for legal, financial or other consulting questions, nor should it be the basis of any investment or other decisions. Fisdom may have issued other similar documents that are inconsistent with and reach different conclusion from the information presented in this document. The relevant offering documents should be read for further details. You should make such researches/inspections/inquiries as it deems necessary to arrive at an independent evaluation of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks involved. Fisdom makes no representations that the offerings mentioned in this document are available to persons of any other country or are necessarily suitable for any particular person or appropriate in accordance with their local law. Among other things, this means that the disclosures set forth in this document may not conform to rules of the regulatory bodies of any other country and investment in the offer discussed will not afford the protection offered by the local regulatory regime in any other country. Past performance contained in this document is not a reliable indicator of future performance whilst any forecasts, projections and simulations contained herein should not be relied upon as an indication of future results. The historical performance presented in this document is not indicative of and should not be construed as being indicative of or otherwise used as a proxy for future or specific investments. The relevant product documents should be read for further details. Fisdom does not undertake any obligation to issue any further publications to you or update the contents of this document and such contents are subject to changes at anytime.
