Sharekhan's research report on Maruti Suzuki India
Maruti Suzuki Limited (MSL) reported Q3FY2021 revenues in-line with our estimates but misses on operating performance on back of unfavorable product mix and rise in prices of key raw materials. MSL is likely to be the beneficiary of buoyant demand in the passenger vehicle (PV) segment, driven by rising demand in tier 2 and 3 cities and rural areas. MSL is expected to sustain its dominant market share, aided by its strong product portfolio and positioning, brand appeal, and ability to launch new models frequently. We expect MSL’s earnings to grow strongly by 49% and 19.5% in FY2022E and FY2023E, respectively, driven by 21.9% revenue CAGR (FY2021E-FY2023E) and 380 bps improvement in EBITDA margin
Outlook
We remain positive on MSL given its near-term demand outlook, structural growth outlook, healthy cash flow generation, and return ratios. The stock is trading at P/E multiple of 24x and EV/EBITDA multiple of 17.1x its FY2023 estimates. Maintain buy rating with TP of Rs 9,000
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