Buy Maruti Suzuki; target of Rs 15,145: Prabhudas Lilladher

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26 Aug, 2025 12:21

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MSIL’s Q1FY25 standalone revenue grew by 9.9% YoY driven by strong volume growth. Gross profit grew by 20.5% YoY, while margin expanded by 262bps YoY to 29.8%, benefitting from better operating leverage, product mix and favorable commodity prices. EBITDA grew by 50.9% YoY, while margin expanded significantly by 344bps YoY to 12.7%. Strong overall performance led APAT to expand by 46.9% YoY. As the sluggishness in entry-level/small car segment continues, the management anticipates the contribution of UVs in industry and in its portfolio to continue to increase. As it is increasing its capacity and strategically planning its portfolio in hybrids and CNG categories, we expect MSIL volume to grow at a CAGR of 7.5% over FY24- 26E. We continue to remain bullish on MSIL given 1) consistent mix improvement in its UV portfolio in domestic and international markets, 2) capacity expansion with multi-powertrain options, 3) premiumization trend coupled with rising disposable income and improved supply chain, and 4) revival in spending, which could further aid in volume expansion. Factoring this, we slightly change our revenue/EBITDA/PAT estimates by 2-4% over the forecast period.

We retain our ‘Buy’ rating with a target price of Rs15,145 (previous Rs14,432) valuing the company at 26x on its FY26E EPS.

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