Motilal Oswal recommended Buy on Maruti Suzuki with target price Rs 2,904 against current market price of Rs 2,916.

Commenting on the investment rationale, the stock broker said,"Maruti Suzuki (MSIL) reported robust 27% YoY growth in Aug 2014 sales to 110,776 units (est 108,000 units). We have factored in 16.3% YoY volume growth for FY15, implying a residual run-rate of 15.8% YoY. Growth was driven by entire portfolio with compacts (Swift, Celerio, Ritz) growing by 35% YoY as first time buyers return and ramp-up in Celerio AMT variant production. Current channel inventory remains at comfortable levels of 4-5 weeks. Expect inventory build-up over next two months considering festive season. Exports have grown by 10% YoY to 12,472 units. Expect upgrade to our FY15 export growth assumption of 4% to 105,000 units."

"MSIL is well poised to benefit from industry demand recovery driven by income growth and consumer sentiments improvement, high exposure to entry-level car buyers as first time buyers return, favorable product lifecycle - premium sedan (Ciaz) expected in Sept-14 and compact SUV in 4QFY15. MSIL trades at 22.4/17.6x FY15E/16E Consol. EPS of Rs 129.9/166.1 respectively," it said.

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