Maruti Suzuki shares rose over 2% in Tuesday morning trade after Jefferies upgraded the stock to "Buy" from "Hold" and raised its target price to Rs 16,500 from Rs 13,800, implying an upside of nearly 22% from current levels.
The brokerage said easing macroeconomic concerns were behind the upgrade. India's passenger vehicle demand has held up well through the first half of calendar year 2026, it noted, even as worries around discretionary spending had weighed on auto stocks earlier in the year.
A key trigger for the more constructive view, according to Jefferies, has been the cooling of tensions in the Middle East alongside a correction in crude oil prices. The brokerage said this combination has eased demand-side worries for the sector, since lower fuel costs typically support consumer sentiment towards car purchases and reduce input cost pressures across the value chain.
Maruti shares gained in morning trade and cooled off subsequently
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Jefferies also pointed to softer metal prices as a factor reducing margin risks for Maruti. Steel and aluminium account for a meaningful share of input costs for automakers, and a decline in these commodity prices is expected to support profitability over the coming quarters.
On the back of these tailwinds, the brokerage raised its earnings per share estimates for FY27-29 by 2-4%, and now expects Maruti to deliver a 16% EPS compound annual growth rate over FY26-29.
Jefferies said the stock's valuation, at 24 times FY27 earnings, remains reasonable given the improved growth and margin outlook, supporting the case for re-rating.
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