Maruti Suzuki Ltd. on Wednesday announced an investment of Rs 7,410 crore to build a third factory in Haryana's Kharkhoda, to expand capacity and meet rising market demand, including exports.
The board approved the establishment of a third plant at Kharkhoda, which will have a production capacity of 2.5 lakh vehicles per year, according to a stock exchange filing.
The factory is expected to be ready and begin production by 2029. The total capacity at Kharkhoda will rise to 7.5 lakh units per year.
The investment will be funded through internal accruals.
The Kharkhoda plant is a greenfield project where the first factory started commercial operations in February to produce the compact SUV Brezza.
Maruti Suzuki produced 1.87 lakh cars last month.
India's demand for passenger vehicles weakened in recent months, amid an economic slowdown. The recent income tax cut announced in this year's budget is expected to reverse the demand slump.
BofA said that April will be a crucial month to monitor growth revival in the automobile space due to the wedding and festive season. Further, liquidity easing will also likely help in creating demand.
Maruti Suzuki Share Price Down
Maruti Suzuki share price was trading 1% lower at Rs 11,746.55 apiece by 1:50 p.m. The benchmark NSE Nifty 50 was down 0.58%.
The stock has fallen 4% in the last 12 months and risen 8% on a year-to-date basis. The total traded volume so far in the day stood at 1.6 times its 30-day average. The relative strength index was at 44.
Of the 46 analysts tracking the automaker, 38 have a 'buy' rating on the stock, five recommend a 'hold' and three suggest a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential upside of 19%.
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