There could be a decent 25-30% upside in Maruti's stock: Prakash Diwan

In a chat with ET NOW, Prakash Diwan, Director, Altamount Capital Management, gives his outlook on Maruti. Excerpts:



ET Now: Is the stock movement good enough in the long term for somebody to come into Maruti or does the overhang continue?

Prakash Diwan: I would start beginning to soften my bearish stand on Maruti. I was very clear that there would be a downward rating, which did happen. However, fortunately it was not deep enough for the market to react to the stock adversely.

Ever since the announcement regarding their Gujarat plant had come in, the market overlooked some of the positives that have quietly developed. One of them has been the launch of Maruti's first ever automatic transmission vehicle, which as sources tell, has taken off extremely well. There is a nine-month waiting period for Celario and if that were to get replicated in some of its other models, Maruti has a huge head start in the segment, which was dragging the overall top line growth down. Therefore, on the back of these positives, the stock should be re-rated.

For somebody wanting to get into Maruti, there could be a decent 25-30% upside because of the re-rating that could happen now, since this entire issue has started to look slightly friendly towards the minority shareholders.