Prabhudas Lilladher's research report on Maruti Suzuki
Maruti Suzuki's 2QFY20 results were operationally in-line with margins came in at 9.5%. However, higher other income and lower tax rate led to a beat in PAT at Rs13.6bn (PLe: Rs11bn). Going forward, the benefit of soft RM price, cost control benefits to be partially offset by higher spends in run up to BS6. With positive demand outlook and controlled inventory levels (even for BS4 vehicles) we believe MSIL is well placed amongst OEMs in light of, a) structural shift towards Petrol cars especially in lower CC segments and, b) with ~78% of its portfolio is skewed to Petrol making it less prone to cost increase challenges in BS6.
We believe, well spread out monsoon would too auger well with rural sales accounting for ~39%. Consequently, we maintain Buy rating on the stock with revised price target of Rs7,809 (from Rs7,336). We value the stock at 24x Sep-21E EPS.
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