Prabhudas Lilladher is bullish on Maruti Suzuki has recommended buy rating on the stock with a target price of Rs 10706 in its research report dated April 27, 2018.
Prabhudas Lilladher's research report on Maruti Suzuki
Maruti Suzuki's Q4FY18 EBITDA grew by ~18% YoY to Rs30.2bn (below our estimates) and EBITDA margin came in at 14.2%, up 20bp YoY but lower 160bps QoQ (PLe 15.8%). However, operating margins for the quarter were impacted by higher freight expenses to the tune of Rs1.8bn, royalty charges being higher by ~Rs1bn on account of unfavourable Yen movement (royalty rates for Q4FY18 stood at 5.7% as against 5.4% for FY18) and higher advertisement costs owing to Auto Expo'18 held in Jan'18 as well as new Swift launch costs. Accounting for the freight adjustment, margins stand at 15.1%.
We marginally increase our volume estimate by 2%/1.4% for FY19/20 . However, we slightly cut our EBITDA margins by ~70bps for FY19/20 to factor in commodity costs pressure and ramp up related costs for the Gujarat plant. We value the stock at 26x Mar20e and arrive at a target price of Rs10,705 and maintain MSIL as "Buy
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