Why Maruti Suzuki shares gained almost 5% today: Should you buy?

This year, shares of Maruti Suzuki surged over 22 per cent, outperforming 12 per cent rise in Nifty 50 index.

Maruti Suzuki India's shares gained almost 5 per cent reaching ₹12,615 per share today (July 9). The stock became top Nifty gainer after Uttar Pradesh (UP) government's announcement of a complete waiver of registration tax on strong hybrid electric cars (HEVs) and plug-in hybrid electric vehicles (PHEVs). The change benefits Maruti Suzuki's Grand Vitara SUV and Invicto MP.

Cars are seen parked under solar panels at the manufacturing plant of Maruti Suzuki in Manesar. (Reuters)

Uttar Pradesh is one the largest markets for passenger vehicles in India with retail sales of 2.3 lakh units in first half of this year. This is up 13 per cent compared to 2.08 lakh units in the year-ago period.

The Grand Vitara is equipped with a hybrid powertrain consisting of a 1.5-litre petrol engine (92PS/122Nm) and an electric motor (80PS/141Nm). Maruti Suzuki Invicto integrates a 2.0-litre petrol engine paired with an e-CVT, delivering a combined system power of 186PS.

Owing to the change, car buyers in UP stand to save over ₹3 lakh on the Maruti Suzuki Invicto and more than ₹2 lakh on the Maruti Suzuki Grand Vitara. The UP government charges 8 per cent road tax on vehicles that cost less than ₹10 lakh and 10 percent road tax on vehicles that cost above ₹10 lakh. Now hybrid vehicles will be grouped with electric vehicles for exemption in registration fee.

This year, shares of Maruti Suzuki surged over 22 per cent, outperforming 12 per cent rise in Nifty 50 index.