Moneycontrol BureauBrokerage house Goldman Sachs has raised price target for Maruti to Rs 4606 from Rs 4302, saying the strong response to recent launches Baleno and Vitara Brezza should drive volumes as well as help offset pressure from a stronger yen."Our estimates call for Maruti’s entire incremental FY17(estimated) volume of 176.5K to come from Baleno and Brezza, which our analysis shows enjoy material 30 percent and 60 percent premiums (blended), respectively, over the average sales price for the legacy portfolio," says the Goldman note."Given the higher ASP, zero discounts and strong volume ramp up, both these models are highly profitable and should cushion margins against a stronger JPY, in our view," says the note.The brokerage firm says Maruti has strategically lowered production of Swift and DZire in favor of Baleno, thereby reducing the discount pressure on the Swift twins. "It is guiding for steep Brezza ramp up given it is produced in the relatively less busy Gurgaon plant. We raise our FY17-19E ASPs by up to 3 percent and earnings by 8 percent on a mix shift to Baleno and Brezza (total volumes are unchanged)," says the note.
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