Bullish on Maruti Suzuki, buy on dips: Prakash Diwan

Prakash Diwan of prakashdiwan.in told CNBC-TV18, "Very clearly Maruti Suzuki is a stock that people are going to compulsorily look at having in their portfolio at some stage whether it is at Rs 4,800 or maybe lower. There could be some profit booking. Now, 10 percent of their domestic sales comes from Nexa showrooms in just a span of one year. Imagine if that goes to 15 percent as the company is now talking about. You have a 50 percent upside to the premium sales of the company and that is going to be extremely different in terms of the trajectory. So, my sense is that Maruti is a rerating stock. It is no more going to be seen as an entry level class A, category A kind of car manufacturer." "They will also have to spend a little bit on R&D in terms of quality control, in terms of making the features more advanced which go well with premuimisation. So, there would be a little bit of a slowdown in that respect in terms of margins. However, I believe the increase in volume, the increase in realisations will more than compensate for all the additional expenses that they would have to incur," he said. "I am quite bullish on the light commercial vehicle (LCV) launch as well because that is going to be a whole new revenue stream and a new segment that is hitherto untapped of sorts except for Ace and Dost from Ashok Leyland, so, interesting space that they are getting into. I am quite bullish on Maruti and I would buy it on all dips. My target on the long-term is about Rs 5,700 in the next 12-18 months provided everything goes well in terms of the consumption theme that we are all waiting for."