Looking at the chart, Maruti (CMP:3600) has immediate support zone of 3567-3537 zone & below that 3500-3450 zone should provide positional support. Sustain below 3450 may invite 3360 & consecutive closing below that, it could crash to 3140 zone (low probability as of now).
On the upside, it should take immediate support from 3573-3567 zone and sustain above 3625-3652, Maruti could target 3695-3728 zone immediately.Short term target could be 3785 & mid term target may be 3950-4050 zone. In the long term, it could target 4100-4150 zone.
Maruti is the undisputed No-1 leader in our car market & also gave a stupendous average return of around 90% to its investors in the last one year. But discontinue of excise duty concessions in small & medium car segments by the Govt. after Dec'14 seemed to impact Maruti significantly as it depends heavily on such models (like Alto, Swift, Wagon-R, Swift Dzire etc). On the other side, surge in sales of its commercial vehicles segment (such as Omni, Eeco Vans, Dzire Tour etc) along with SX4 and newly launched Ciaz helped it to recover some lost ground in its S&M car segment. Recent strategy of Tata Motors to concentrate less on CV (like Indica) has also helped Maruti in its Dzire Tour sales. Now all the old non-AC taxis are fast being replaced by latest AC taxis, such as Dzire Tour, thanks to focused funding by various banks. Due to pollution factors, eventually all the old models Taxis (such as diesel Ambassador, Fiat etc) greater than 10-15 years may be replaced actively in the coming years by far superior latest CV models, such as Maruti Dzire.
Although, Hyundai is a close competitor of Maruti, considering comparatively low price of spare parts and superior distribution & servicing network of Maruti, it is expected to retain the No-1 spot in the coming days also, preferred by the masses.
Going ahead, expected "Shinning India" story, lower rate of car loan interests, higher disposable income for urban as well as rural youths may enhance the sales of car industry, including Maruti. But this year's current unseasonal rains & concerns about crop production in rural area may dampen the story albeit to a small extent.
Expected Land Reform Bill & yesterday's Real Estate Bill may also be a game changer of the car industry, as the rural as well as urban people may be able to procure a higher price to monetize their land assets and every family in India first aspired two things, own a home and a car after getting sufficient money in hand.
As par BG model of quick techno/funda metrics, median valuation of Maruti is around 3250 considering its TTM EPS of around 107. But, if we assume expected forward EPS of around 170 (FY-17), the median value should be around 4100 under the current market conditions.
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | LONG TERM | SHORT TERM | MEDIAN VALUE | 200-DEMA | 10-DEMA |
| MARUTI | 106.83 | 694.45 | 28.65 | 3102.37 | 3336.15 | 3219.26 | 3144.62 | 3636.41 |
| MARUTI | 170 | 694.45 | 28.65 | 3913.55 | 4208.46 | 4061.00 | 3144.62 | 3636.41 |
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