The share price of Maruti Suzuki India rose in the early trade on July 30, a day after the car maker posted a net loss of Rs 249.4 crore for the quarter ended June 2020.
The numbers were, however, better than the estimates of analysts polled by CNBC-TV18 who the loss at Rs 445 crore.
Profit in the June quarter 2019 stood at Rs 1,435.5 crore and was Rs 1,291.7 crore in the March quarter 2020.
Revenue from operations declined sharply by 79.2 percent to Rs 4,106.5 crore compared to the year-ago period.
At operating level, its EBITDA (earnings before interest, tax, depreciation and amortisation) loss stood at Rs 863.4 crore, which was better than CNBC-TV18's analysts' estimates of Rs 540 crore loss. The company reported EBITDA at Rs 2,047.8 crore in June 2019.
Here is what brokerages have to say about the stock and the company:
East India Securities | Rating: Sell | Target: Rs 5,243
Maruti Suzuki is trading at an elevated valuation of 26.4x FY22e EPS of Rs 238 and we believe most of the positives of demand recovery are already factored in the valuation.
The margins for FY21e will remain one of the lowest in the recent past due to operating deleverage and the recent surge in commodity costs.
Sharekhan | Rating: Upgrade to buy from hold | Target: Rs 6,925
The company is witnessing a strong pick up in demand, with retails reaching 85-90 percent of pre-COVID levels. Moreover, a demand shift towards entry-level cars is likely to benefit Maruti, which has a stronghold in the segment.
We have raised our earnings estimates to factor in the demand recovery and also raised our target multiple from 25x to 27x.
At CMP, the stock is trading at 24.1x FY22 earnings, which is close to its long-term historical average. However, given the early recovery cycle scenario, valuation multiples can expand above historical averages.
Dolat Capital | Rating: Reduce | Target: Rs 6,520
The near-term outlook remains cloudy due to the coronavirus pandemic, with both demand and supply remaining uncertain.
The broking house expects the company's EBITDA margins to remain under pressure in FY21E due to lower capacity utilisation, adverse product mix, adverse currency movement (JPY/INR).
The management is aggressively working towards bringing down the fixed cost, model development cost and increase localisation.
It expects a sharper recovery in margin from FY22, driven by operating leverage, commodity tailwinds and cost-cutting measures.
Prabhudas Lilladher | Rating: Buy | Target: Rs 6,858
Prabhudas Lilladher believes the company is not only a beneficiery of likely trend of a shift towards personal mobility and down trading but is also seeing a structural shift towards petrol cars, especially in the lower CC segments.
With lowered capex intensity, FCF generation will remain robust at Rs 33 billon over FY21-22.At 0916 hours, Maruti Suzuki India was quoting at Rs 6,206.90, up Rs 21.30, or 0.34 percent, on the BSE.