Maruti Suzuki may test Rs 4786, says Dipen Sheth

Dipen Sheth, Head-Institutional Research at HDFC Securities told CNBC-TV18, "You have to take a one year or a two year call, so I am not so worried about whether we are going to go from 7,000 to 7,500. At 7,500, my worry is going to be, are we in any danger of falling to 6,500 or is there more opportunity to go to maybe 9,000. And I will obviously give myself a year or two for that eventuality to play out. So, I do not think my thesis has changed materially from 8,000 down to 7,000 and back to 7,500. We are in a long-term structural mint."He further added, "On the largecaps, the obvious guys to buy, unless there is a structural change in the business, are the guys who have fallen for no discernible reason. And, you can always invent and discover reasons why something should have fallen in retrospect. But largely the structural story seems to be intact.""So, there was a big challenge which played out in the case of Tata Motors because of global demand apparently, which was going to crack. And by the way, that fear is not proved to be well-founded, if you look at their latest US sales, for example. And, if you just look a year-on-year numbers for Tata Motors and you will see that this is a company which has consistently grown every year in numbers after the global financial crisis.""For Maruti Suzuki, the structural story is very much intact and now, even with the rural flip that has come into the Budget, and with the Seventh Pay Commission, these are old arguments, I am not saying anything new about Maruti. There is going to be 20-25 percent earnings compounding over the next two years and it is down. And our target price is close to about Rs 4,786 on this one.""And, if you look at the huge amount of depreciation that they book, and if you add that back to earnings and look at cash earnings, it is probably available for 10x or something on FY18 basis. And I do not think there is a substantial risk to earnings there until and unless there is war or something," he said.