Expect 10-15% upside in Maruti Suzuki: Saurabh Mukherjea

Expect 10-15% upside in Maruti Suzuki, says Saurabh Mukherjea, Head of Equities, Ambit Capital.

Mukherjea told CNBC-TV18, "The fundamental difference between a Bajaj Auto and Hero Motocorp is the export franchise. With the rupee having devalued by 30% against the Chinese currency, our sources in Middle East and Africa are saying that Indian exporters across the piece not just Bajaj but even Bajaj Electricals, TTK Prestige, a range of auto ancillary companies, our exporters’ competitiveness has been transformed over the last year and I think Bajaj Auto will benefit very strongly from that."

He further added, "Hero Motocorp’s export franchise is at a very nascent stage and unfortunately at this juncture its main concerns would be dealing with the stalling of domestic demand and with Honda’s aggression in India."

"In case of Maruti Suzuki, what we are playing here is the market overreacted to the Manesar episode. Yes it’s quite serious labour issue but I think the production disruptions there and the cost to Maruti involved in dealing with that production disruption is quite modest. Given the quality of the franchise and the attractive valuations it are available at, I think there is 10-15% upside here and I think it’s good to see some serious money coming into the stock. High class name attractively valued at this juncture."