Maruti Suzuki Q4 profit up 43%; most brokerages maintain 'buy' on the stock

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Here is what brokerages have to say about stock and the company post March quarter earnings:

Prabhudas Lilladher

Brokerage firm remains positive on company's growth prospects given (1) market share gains and ASP increase coming from filling white spaces in UV portfolio, (2) c220bps increase (over FY23-25E) in EBITDA margins on the back of commodity cost softening and higher UV share and (3) rural revival.
It reiterates buy rating with a revised Target Price of Rs 10,300 (Rs 10,600 earlier) at 26x Mar-25E EPS.

Motilal Oswal

Stable domestic PV industry growth and a favourable product lifecycle augur well for the company.

Motilal Oswal expects a recovery in both market share and margins to gather momentum in FY24, led by an improvement in supplies, a favourable product lifecycle, mix and operating leverage.

It maintains a buy with a Target Price of Rs 10,100/share (premised on 25x Mar’25 consolidated EPS).

Sharekhan

After registering in-line performance, management is looking to outperform the PV industry’s growth in FY2024, as it anticipates healthy performance in the SUV segment in FY2024.

With a strong order book of 412,000 units, management is optimistic about its performance; however, management indicated about the production challenges in Q1FY2024 due to the shortage of semiconductor chips.

Given a strong order book in hand, below-normal dealer inventory, healthy response to new products, and recovery in its EBITDA margin profile, the broking house continues to maintain its positive view of the company.

With the expectation of a 9.4% volume CAGR and a 200 bps expansion in EBITDA margin to 11.4% over FY2023-FY2025E, it expects a 21.3% earnings CAGR.

Sharekhan reiterates its buy rating on the stock with an unchanged price target (PT) of Rs 10,965, factoring in gains in market shares through refreshed and new launches.

LKP Research

Maruti Suzuki reported a strong margin performance in the quarter (consecutive fourth quarter of growth) on better product mix, lower discounts and higher ASPs.

The demand is going quite strong driven by personal mobility theme, first time buyers, new variant launches and hybrid & CNG variants.

Going forward, with supply issues getting resolved sooner or later, LKP believes that the strong order book, newer SUV launches (“eVX”, Jimny and Fraunx), digitization of sales, expanding dealer network (now 3,500 sales outlets across India), higher capacity utilization rates, favourable currency movement and product mix should trigger a superior volume and margin profile in the ensuing years.

With multiple positive drivers in place, brokerage house remains sanguine on the stock with FY 25E target of Rs 10,034. Maintain buy.

Morgan Stanley

The foreign broking house has kept overweight rating on the stock with a target price of Rs 11,155 per share. The FY24 EBIT margin of 8.1% was the highest in 18 quarters, and expect company to grow ahead of the market in FY24.

The leverage and mix gains could drive margin expansion further.

Jefferies

Brokerage firm has maintained buy rating on Maruti Suzuki with a target price of Rs 11,000 per share. The Q4 volumes grew 5% YoY, while EBITDA and PAT rose 38-43%. The company delivered a good FY23 with volumes and PAT at new all-time highs.

The chip constraints might limit the production, especially in Q1.

Bernstein

Research firm has kept outperform rating to Maruti Suzuki with a target price of Rs 10,800 per share. The Q4FY23 was a beat, but it is not seen as a catalyst.

The report highlights that Maruti lacks catalysts as supply constraints are likely to impact Q1 production, and the backlog is less likely to deliver growth.

The report suggests that a continued recovery in margin is a theme as the mix continues to shift to premium and SUVs.

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