Brokerages were bullish on Maruti Suzuki after the Uttar Pradesh government said it would relax some taxes for hybrid vehicles.

What Happened: The UP government said on Tuesday it will completely waive registration tax for strong-hybrid electric cars (HEVs) and plug-in hybrid electric vehicles (PHEVs). This will benefit Maruti's Grand Vitara SUV and Invicto, whose prices will be reduced by ₹2 lakh and ₹3 lakh respectively. 

Brokerage Views: Morgan Stanley maintained "overweight" call with a target price of ₹14,105. It reasoned that the UP government's road tax waiver is a sizable incentive provided by the state for hybrid cars. 

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Maruti, as the key player in hybrid vehicles in India, stands to benefit from the measure, the brokerage firm said. It added that UP's move will encourage other states to follow. The share of hybrids is also expected to rise as more hybrid models are coming, the research firm noted. 

Citi also maintained "buy" call with a target price of ₹15,100. It said the UP government's move concerning taxes on hybrid vehicles is positive for Maruti, Toyota and Honda. The companies could benefit further as more hybrid models launch. 

UP contributed 10% to personal vehicle sales in India and 11% to Maruti's domestic sales in FY24. Maruti's market share in UP was 44%, compared with 42% nationally. The company continues to be Citi’s top pick in the sector and may see further upside to its volumes if other state governments follow the UP government's rules. 

Price Action: Shares of Maruti Suzuki rose 1.53% to ₹13,024 on Wednesday morning.

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