Shares of Maruti Suzuki Limited were relatively unchanged, trading higher by 0.2 percent to Rs 12,726 on April 29.
The automobile major's Q4 net profit and revenue fell short of estimates by just a whisker, prompting mixed reactions from multiple brokerages. A few brokerages have issued ‘sell’ calls on the Maruti Suzuki stock given its recent runup and concerns over maintaining volume growth; others have issued ‘buy’ calls eyeing margin expansion and an industry-beating performance.
In the fourth quarter of the last fiscal year, Maruti Suzuki reported a 48 percent year-on-year rise in its net profit to Rs 3,878 crore, with revenue at Rs 38,235 crore. Analysts had projected a profit of Rs 3,916 crore on revenue of Rs 38,772 crore for the country’s largest carmaker, according to the average of nine brokerage estimates.
In the fiscal fourth quarter, Maruti Suzuki reported a 48 percent year-on-year rise in its net profit to Rs 3,878 crore, with a revenue of Rs 38,235 crore. Analysts had projected a profit of Rs 3,916 crore on a revenue of Rs 38,772 crore for the country’s largest carmaker, according to the average of nine brokerage estimates.
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Stock call: should you buy, hold, or sell?
Domestic brokerage Kotak Institutional Equities has issued a ‘sell’ call on the Maruti Suzuki stock with a price target of Rs 10,500, a downside of over 17 percent from the last closing price. Analysts suggest that the volume trajectory is likely to remain muted over FY25. Further, they said that the company's volume trajectory in the small and SUV segment is likely to decline. "We expect market share to slip to about 40.5-41 percent owing to newer launches by competitors,” said a Kotak research note.
Nomura is 'neutral' on the stock and has a price target of Rs 12,523, a marginal downside of over 1 percent. It is also of the view that market share can come under threat from other players in FY 2025-26. The brokerage also predicts that discounts could rise as inventory increases.
On the other hand, HSBC analysts recommend 'buying' the stock with a target price of Rs 14,000. That's an upside potential of over 10 percent from the last close of Rs 12,703. It suggests that even missed Q4 estimates will not impact FY25-26 expectations. HSBC has also said that the growth of 5-6 percent in the year will come on the back of CNG and exports. "Post run-up, the stock is likely to be range bound in the near-term but medium-term outlook remains positive," it said in a report.
Motilal Oswal is bullish on the Wagon-R maker and recommends a 'buy' with a price target of Rs 14,700. "We expect Maruti to continue to outperform industry growth in FY25. While the bulk of input cost benefits is likely to be behind, we expect the company to post about 70 basis points margin improvement to 12.5 percent in FY25, largely led by an improved mix," it said. This would, in turn, drive a steady 13 percent earnings compound annual growth rate over FY 2024-26. It also added that any GST cuts or favourable policy for hybrids by the government may drive a rerating as the company would be the key beneficiary of such changes.
The carmaker's domestic volumes stood at 505,291 units in FY24, up 12 percent year-on-year. Exports for the period stood at 78,740 units, up 22 percent YoY.
Maruti shares have gained 29 percent on the bourses in the last three months.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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