Buy Maruti Suzuki; target of Rs 11,150: Motilal Oswal

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Motilal Oswal's research report on Maruti Suzuki

1QFY24 EBIT miss was led by high employee costs due to one-time retention payments and marketing spends on new launches (~80bp impact). Aided by new products, MSIL is expected to outperform underlying industry growth of 6-8% in FY24, resulting in market share gains and margin recovery. This should be further supported by easing supply challenges. We increase our FY24E EPS by 3% to factor in better ASPs and higher other income.

Outlook

However, we cut our FY25E EPS by 1%, as benefits of higher ASP and higher other income are more than offset by the SMG acquisition (assuming consideration of INR130b paid in cash). The stock trades at 25.8x/23.5x FY24E/FY25E consolidated EPS. Maintain BUY with a TP of INR11,150/share (premised on 25x Sep’25E consolidated EPS).

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Maruti Suzuki - 01 -08 - 2023 - moti