Morgan Stanley upgrades Maruti Udyog

Morgan Stanley has upgraded the stock of Maruti Udyog to ‘Outperform’ with a target price of Rs 1,599. Morgan Stanley has been on the sidelines for Maruti, as the industry was slowing, competition was intensifying and the currency movement was adverse.

But now since all the three factors are beginning to turn favourable and the trend will strengthen in the coming year, Morgan Stanley has upgraded the stock to ‘Outperform’.

The current slowdown in cars is a cyclical downturn in a highgrowth industry, and Morgan Stanley expects demand to slowly recover in FY13, with the industry up 20%. Operating leverage and favourable currency enable the company to expand margins to 9.5% in FY13, up 190bps.