Prabhudas Lilladher's research report on Maruti Suzuki
We increase our EPS estimates by 6/3/1% for FY23/24/25 as we build in higher realisations led by improved product mix along with volumes for newly launched Jimny and Fronx. In 3QFY23, Maruti’s (MSIL) EBITDA margin at 9.8% expanded 50bps QoQ led by (1) better-than-expected realisations (Rs 623k, +8% QoQ) driven by increased contribution from UVs (21% vs 16% sequentially) and (2) benefit from raw material cost softening (+40 bps QoQ). The company currently has order book of 363k units of which ~33% is contributed by new models – Brezza, Vitara, Baleno. Newly launched Jimny (off-roader) and Fronx (compact SUV) have also received good response and deliveries are expected to commence from beginning of FY24. This will lead to increased contribution from UVs in product mix (we build in ~25% vs ~21% currently) along with market share gains (41% currently vs peak of 52%). We remain positive on MSIL as the company will benefit from (1) market share gains and ASP increase coming from filling white spaces in UV portfolio, (2) c260bps increase (over FY23-25E) in EBITDA margins on the back of commodity cost softening and higher UV share and (3) rural revival.
Outlook
Reiterate ‘BUY’ with a revised target price of Rs 10,600 (Rs 10,000 earlier on Sep-24E) at 26x Dec-24E EPS.
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