Macquarie has opted to maintain a Neutral rating on Maruti Suzuki, with a target price of ₹11,565.

This decision is in response to Uttar Pradesh’s decision to eliminate taxes on strong hybrid vehicles, effectively reducing the price gap with internal combustion engine (ICE) vehicles from 20 per cent to 10 per cent. This policy change is expected to significantly enhance Maruti’s market position, given its substantial 44 per cent market share in UP and its contribution of 10-11 per cent to India’s total car sales.

The reduced taxes are anticipated to significantly shorten the payback period for strong hybrid vehicle owners, making them financially attractive with a payback period reduced from 11 years to just five years.

Macquarie analysts foresee a positive impact on Maruti’s market position, especially in the strong hybrid segment, where it aims for a 20 per cent market share by CY2023. Emphasizing further potential, the focus on localizing robust hybrid technology could further enhance affordability and drive additional market share gains over the medium term.