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What should investors do with Maruti Suzuki post Q2 results: Buy, sell or hold?

Maruti Suzuki India has reported a standalone profit after tax of Rs 475 crore for the quarter, decreasing 65 percent from Rs 1,372 crore reported in the same quarter last year.

October 28, 2021 / 10:04 AM IST
 
 
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Maruti Suzuki share price slipped in the early trade on October 28 after the company announced its September quarter results a day before.

On October 27, the India’s largest passenger vehicle manufacturer Maruti Suzuki India reported a standalone profit after tax of Rs 475 crore for the quarter, decreasing 65 percent from Rs 1,372 crore reported in the same quarter last year. On a sequential basis, profit improved marginally by 7 percent from Rs 441 crore reported in the June 2021 quarter.

The company managed to improve its standalone revenues from operations by 10 percent to Rs 20,539 crore for the quarter, compared to Rs 18,745 crore in September 2020 quarter. On a sequential basis, the revenues jumped 16 percent from Rs 17,771 crore.

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

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JPMorgan

The Research house has an 'underweight' rating on the stock with a target price of Rs 6,300 as Q2 results were significantly below forecasts. It feels that the financials will remain weak unless there is a significant improvement in the launch momentum.

The market share losses are resulting in inadequate price hikes. The research firm cut FY22/23/24 EPS by 18%/9%/3%.

Morgan Stanley

Morgan Stanley has an overweight rating on the stock with a target at Rs 8,728 per share on the back of troughs in margin, volumes & model cycle.

However, P/E in the context of depressed earnings is also attractive.

Credit Suisse

Credit Suisse has retained the outperform call with a target at Rs 8,759 on strong industry growth expectations.

The production normalisation, margin recovery & strong new model cycle will be tracked.

It lowers FY22-24 EPS by 2-6% factoring hit from chip supply, however, remain positive on impending new model cycle & benign valuations.

Prabhudas Lilladher

We reduce our earnings estimates by ~13%/8% for FY22/23 to factor in lower volumes and weak 2QFY22 results. However, maintain accumulate with a revised target price of Rs 8,097 at 27x Sep-23E EPS as we believe that the market leader will likely benefit from shift to personal mobility and increasing demand of CNG vehicles.

Going ahead, new product launches and its ability to pass on prices in competitive environment remains the key.

Motilal Oswal

Strong demand, softening commodity inflation, and improving chip shortage supports a margin recovery.

We expect a recovery in 2HFY22 in both market share and margin, led by a favorable product lifecycle, operating leverage, and mix as well as price action/cost-cutting.

We maintain our buy rating with a target price of Rs 8,450/share (27x Sep'23E consolidated EPS).

Sharekhan

We expect strong recovery from FY2022, driven by normalisation of economic activity. Margins are expected to improve from 7.5% in FY2021 to 11.1% in FY2023E, driven by operating leverage and cost-control measures.

We remain positive on the company on account of its structural growth outlook (which remains intact), healthy balance sheet, and comfortable valuations.

We retain our buy rating on the stock with a revised price target of Rs 8,251.

At 09:19 hrs Maruti Suzuki India was quoting at Rs 7,335.70, down Rs 16.80, or 0.23 percent on the BSE.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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first published: Oct 28, 2021 10:04 am
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