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What should investors do with Maruti Suzuki after Q3 result: buy, sell or hold?

The company reported a 24.1 percent YoY rise in standalone net profit at Rs 1,941.4 crore and a 13.3 percent rise in standalone revenue at Rs 23,457.8 crore.

January 29, 2021 / 05:39 PM IST

Maruti Suzuki share price rose in the early trade on January 29, a day after the car-maker reported a 24.1 percent year-on-year (YoY) rise in Q3FY21 standalone net profit at Rs 1,941.4 crore. In the corresponding quarter of the previous financial year, profit numbers were Rs 1,564.8 crore.

The company reported a 13.3 percent YoY rise in Q3 standalone revenue at Rs 23,457.8 crore against Rs 20,706.8 crore in Q3FY20.

Also Read:  Maruti Suzuki Q3 FY21 profit beats estimates, rises to Rs 1,941.4 crore

Here is what some brokerages have to say about the stock and the company after the Q3 numbers:

Motilal Oswal


While the company has seen a strong demand recovery, commodity cost inflation has delayed the margin recovery. We expect a gradual margin recovery as the cost is absorbed over the next two or three quarters. Strong demand and stable competitive positioning would drive convergence of P/E towards its five-year average of ~30x.

The stock trades at 28.1x/22.8x FY22/FY23E consololidated EPS. We value the stock at 27x Mar’23E consololidated EPS (at a 10 percent discount to its five-year average P/E v/s 25x earlier to factor in for strong demand and stable market share). Maintain buy.


The company is witnessing a strong recovery in domestic demand with sales volumes sustaining growth in the post-festival season. Sales enquiry is strong even after the festive season, underpinning our view of genuine demand in the passenger vehicle (PV) segment.

We expect a strong recovery from FY2022, driven by normalisation of economic activity. Margins are expected to improve, driven by operating leverage and cost-control measures. We have maintained our buy rating with a target price of Rs 9,000.

Prabhudas Lilladher

The recent price hike should partially dilute RM inflation in 4Q, however, we expect gross margins to remain under pressure. Positive demand even after festivals has lead to MSIL’s overall order backlog to remain healthy at around 1.5 months. We remain constructive on MSIL as we believe itis not only the beneficiary of the shift towards personal mobility but also a structural shift towards petrol/CNG segments. We cut FY22/23 EPS by 3%/1% to factor in a weaker mix.

We factor in EBITDA/PAT CAGR of 15%/17% over FY20-23 and maintain buy on the stock with a revised price target of Rs 8,428 (earlier Rs 8,465) based on 27x Mar23 EPS (unchanged, v/s 30x 5yr LPA).

ICICI Direct

For Maruti Suzuki, we build sales, PAT CAGR of 16.3 percent and 27.1 percent, respectively in FY21E-23E. In our view, lack of sufficient margin expansion triggers puts already stretched valuations under further strain (trades at ~33x FY23E EPS).

We also await decisive commentary from the company on the EV front. We maintain our cautious stance on stock and value it at Rs 7,000 i.e., 30x P/E on FY23E EPS (earlier target price Rs 6,450). We assign reduce (sell earlier) rating on the stock.

Dolat Capital

We expect increasing realisation of used cars and recovery in urban demand to aid in faster recovery of replacement demand. We expect a broad-based long-term demand recovery to be visible from FY22 as GDP growth and job creation rates pick-up.

Demand prospects remain upbeat, led by a healthy order-book and a likely improvement in replacement demand. Near-term margins may remain under pressure due to higher commodity prices. Any fall in commodity price to be key positive. We value the stock Rs 8,425 (based on 27xFY23E EPS). Maintain accumulate.

Goldman Sachs

The research house has maintained a buy rating on the stock with a target at Rs 9,126 per share. The company was cautious in passing on costs, which was surprising in a highly inflationary environment. The industry may see more pricing actions as demand sustainability improves, CNBC-TV18 reported.


UBS has maintained a buy rating with the target at Rs 9,400 per share. The demand is strong but rising commodity prices are a headwind. UBS expects new SUV launches and re-introduction of diesel vehicles to lift market share. It also expects premiumisation in passenger vehicles (PV) and a 15 percent industry value CAGR over FY20-25, reported CNBC-TV18.


The research firm has kept a buy rating with a target at Rs 8,700 per share. The Q3 was marred by high commodity costs. It retains volume estimates but has cut gross margin estimates.

The EBITDA estimates over FY21-23 cut by 4-18 percent, while profit estimates for FY21-23 were cut by 0-5 percent, CNBC-TV18 said.


CLSA has maintained sell call and cut the target price to Rs 6,880 from Rs 7,000. The earnings miss highlights the risks of a weakening model cycle. The Q3 operating results below were below its and consensus expectations.

The operating leverage gains were offset by a weaker gross margin. The management indicated reluctance to fully pass on commodity pressure. The company prioritised market share over margin and expect this to continue, reported CNBC-TV18.


At 0917 hours, Maruti Suzuki India was quoting at Rs 7,646.70, up Rs 58.20, or 0.77 percent, on the BSE.

The share touched its 52-week high of Rs 8,400 on January 13, 2021 and 52-week low of Rs 4,002 on  April 3, 2020. It is trading 8.97 percent below its 52-week high and 91.07 percent above its 52-week low.
Moneycontrol News
first published: Jan 29, 2021 09:37 am
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