Prabhudas Lilladher's research report on Maruti Suzuki
Maruti’s 2QFY22 EBITDAM disappointed at 4.2%, led by soaring raw material costs (250bps impact) and low production levels (116k units) regardless of three price hikes over 1HFY22 (~1.9% in Sep-21). Despite strong demand, orders remained unfulffilled due to production cut of 60%/40% in Sep-21/Oct-21. Further, 2Q market share declined to 43% vs 48% of FY21 due to new product launches from competitors and rising demand in SUV segment. Exports outlook, however, remains strong with pickup in Africa and other export markets.
We reduce our earnings estimates by ~13%/8% for FY22/23 to factor in lower volumes and weak 2QFY22 results. However, maintain ‘ACCUMULATE’ (with a revised target price of Rs 8,097 at 27x Sep-23E EPS) as we believe that the market leader will likely benefit from shift to personal mobility and increasing demand of CNG vehicles.
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