Maruti Suzuki's over two-fold jump in December quarter profit beat analyst estimates of a 85-90 per cent growth, with revenue growth beating projections by 10-15 per cent. Following the quarterly results, analysts have upped Maruti's estimate for FY24 and FY25 by up to 15 per cent and have either maintained or revised upward their price targets.
Nuvama Institutional Equities has upped its target for the stock to Rs 11,291 from Rs 11,191, as revenue growth came in 10 per cent higher than its projections and Ebitda 15 per cent above its estimates. Maruti's superior franchise raises hope that it will make a strong comeback, it said while expecting Maruti's market share to grow to 48 per cent from 45 per cent over FY22–24E, as it builds in a potential success of already launched UVs – Brezza and Grand Vitara and next set of UV launches namely Jimny and FRONX.
"However, competition in UVs is intense with 45 existing models capturing 45 per cent of PV market (compared to 19 models in the hatchback segment). Having said that, semi-conductor shortage is still a bottleneck and can act as a dampener in the near-term as far as ramp up of its UVs is concerned," it said.
Maruti Suzuki India posted a net profit of Rs 2,351.3 crore for the third quarter on account of robust sales aided by enhanced product portfolio. It had logged a net profit of Rs 1,011.30 crore in the year-ago quarter. Net sales for the quarter jumped to Rs 27,849.2 crore from Rs 22,187.6 crore YoY.
Nirmal Bang said demand for Maruti Suzuki is holding reasonably well. On the EV front, it believes Maruti Suzuki is lagging its competitors and is trying to navigate the transition through Hybrids. Overall, the brokerage remains positive on Maruti Suzuki and factors in EPS CAGR of 37 per cent over the next three years. The brokerage has a target of Rs 11,188 for the stock.
Motilal Oswal said Maruti's strong beat in Q3 was driven by better mix (8 per cent beat on average selling price) and higher other income. While the mix will continue improve as recently launched products reflect in P&L from June quarter, commodity price benefit was largely reflected in December quarter and the impact of yen appreciation will reflect from June quarter, it said.
"We expect continued improvement in performance and response to recently launched products to act as the catalyst for the stock," it said while suggesting a target of Rs 10,500.
Emkay Global has increased FY23E EPS 7 per cent to Rs 263 on higher margin and other income assumptions. It retained 'Buy' on the stock with a target of Rs 10,700 per share from Rs 10,500 earlier, based on 27 times core P/E on FY25E EPS and cash of Rs 1,260 per share. Key downside risks include macro slowdown, lower-than-expected volumes in new products, higher competitive intensity and adverse movement in currency rates, it said.
"Orderbook for Maruti’s new model – Brezza and Vitara remains strong. With the addition of two new models in its portfolio (Jimny and Fronx), we see the orderbook starting to again pick up for the new models and there-by mix to move towards higher ASP models. With these models, Maruti has addressed white spaces in its portfolio. Maruti's domestic PV share currently stands at 41 per cent. We see Maruti's financials continue to improve aided by operating leverage and better mix," said Prabhudas Lilladher while suggesting a target of Rs 10,000 on the stock.
Kotak Institutional Equities, meanwhile, maintained its sell ratingfor Maruti and has a target of Rs 7,850 on the stock.It expects Maruti Suzuki's produc mix benefit to partly reverse in coming months. It also sees domestic PV segment demand moderating sharply in FY2024E due to cost headwinds and waning of pent-up demand.
"We also expect the Ebitda margin to remain below 11 per cent over FY2024-25E, as we expect discounts to inch up, especially in the entry level segment, unfavorable forex and an uptick in base metals prices," it said.
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