Citigroup maintains its 'buy' rating on Maruti Suzuki and raises its target price to 1,681 rupees from 1,654 rupees.
Maruti Suzuki is seeing signs of improving demand in the festival season, with "healthy" volume pick-ups according to a Citigroup research note attributing the information to its recent conversations with the auto maker's management.
Citigroup says Maruti Suzuki and competitors have raised prices by around 1-2 percent "because companies sense that customers are returning to showrooms," according to the report dated on Monday.
The bank warns FX and labour remains areas of concern for Maruti Suzuki, which suffered violent clashes between workers and management at its plant in Manesar in July.
"Manesar labor issues have been resolved for now, but we think labor is a contentious aspect not just for MSIL but the manufacturing sector in aggregate," Citi writes.
Maruti shares up 0.8 percent at 1,397.05 rupees.