Maruti Suzuki Is Good Blue Chip Stock To Buy Now: Sonia Shenoy CLSA

Blue Chip Stock To Buy Now

Investors are usually looking for good quality blue chip stocks to buy.

The reason blue chip stocks are preferred for investment is because they offer safety of capital and the possibility of a reasonable gain.

Blue Chip stocks are stocks of companies which have very good management, growth track record

There are a number of blue chip stocks available for investment in the Indian stock market. Stocks like HDFC Bank, Tata Motors, Coal India, Nestle, Asian Paints are examples of blue chips stocks.

These stocks have many years of consistent growth in them. They also have strong brands and trademarks and have a lot of competitive strength in the market.

Investors can buy these blue chip stocks and hold them in the portfolio for decades to come. The stocks compound their earnings slowly and steadily and become multibaggers.

Maruti Suzuki is good buy now

CLSA has now upgraded Maruti and recommended a buy.

This was announced by Sonia Shenoy of CNBC-TV18.

Sonia Shenoy pointed out that the success of new products in personal vehicle segment and reduced exposure to yen works in favour of Maruti.

CLSA stated that various factors combined with higher free cash flow (FCF) generation justify Maruti commanding a higher valuation multiple than the stock’s historical average. It stated that the operational outlook is strong given improving PV industry growth and abating margin concerns.

Maruti’s success of Baleno, Ciaz and Vitara Brezza has taken it to leadership position in all segments except rural SUVs and significantly improved Maruti’s long-term market share outlook.

CLSA said it is impressed that Maruti’s yen exposure is down to 14 percent from about 23 percent of sales. It said that the lower yen exposure reduces the risk of earnings volatility due to FX movements.

The success of new models such as Baleno, Ciaz and Vitara Brezza has helped Maruti gain leadership position in five out of six passenger vehicle segments, which improves long term market share outlook for the company when Indian passenger vehicle market is likely to move to higher priced segments

CLSA has upgraded Maruti Suzuki India and raised the target price to Rs 5,850 from Rs 5,000.

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