Brokerages are divided on Maruti Suzuki share price a day after India’s largest automaker reported June-quarter earnings, especially margins, little below expectations. The stock on Thursday gained over 1 per cent to Rs 8771 crore on the BSE intraday. 

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The company’s net profit jumped to Rs 1,036 crore mainly due to a low base in the year-ago period as against Rs 440.8 crore profit a year-ago quarter when the company's production was hampered by COVID-related disruptions.  

During the quarter, MSIL registered net sales of Rs 25,286.3 crore as against Rs 16,798.7 crore in a year ago and the operating profit stood at Rs 1260.7 crore against Rs 77.9 crore million in Q1FY22. 

The company has taken a price hike of around 1.3 per cent during Q1 to partly offset raw material cost inflation. The recent correction in commodity costs and favourable impact of currency movement will start reflecting from Q2FY23 margins, JM Financial said. 

New model launches in the coming months, healthy order book and commodity/currency tailwinds will further support strong performance going ahead, JM Financial said, ascribing 25x PE to arrive at target price of Rs 10,300 per share (nearly 19% upside), while maintaining a Buy rating. 

Strong demand and favorable product lifecycle for Maruti augurs well for its market share and margins, Motilal Oswal said, expecting a recovery in H2FY23 in both market share and margins, led by an improvement in supplies, favorable product lifecycle, and improved mix. 

The stock trades at 37.7x/23x FY23E/FY24E consolidated EPS, said the brokerage retaining a Buy rating with a target price of Rs 10,700 crore, (24% upside) (based on 27x Jun’24E consolidated EPS). 

Global brokerage firm CLSA retains a Sell rating on Maruti, target raised to Rs 7,374 from Rs 7,053 per share on reporting lower than expected EBITDA (earnings before interest, taxes, depreciation, and amortization) margins and weak EBITDA on lagged impact from raw material cost pressures. 

The brokerage stated that the material cost tailwinds are yet to play out, but airbag regulation is a threat, and success in the SUV segment is still not proven. 

Maruti misses Nomura’s Q1 expectations, the brokerage maintained a Neutral call on the auto stock with a target price of Rs 8,970 per share. It pointed out that an industry slowdown in FY24 is a risk and key risks over the next two years remain a faster shift to electric vehicles.