Strong Q2. Maruti Suzuki stock rises 46% from 1-year low thanks to

on Friday, Maruti Made its biggest profit in 4 months on the exchanges. On BSE, the stock . ended on 9,494.10 each 448.05 or 4.95%. On this exchange, the stock touched a new 52-week high of Rs. 9,548 each.

of the company Market hat is around 2.87 lakh crore.

Meanwhile, Maruti shares rose on BSE. to end at 506.05 or 5.06% 9,548. Here, the stock clocks a 52-week high 9,549.95.

The stock touched a 52-week low on the BSE 6,540 each on March 3, 2022. From this 1-year low, the stock has risen so far 3,008 or 45.99% (taking into account the new 1-year high) on the exchange to date.

The shares have gained a lot in view of the closing price on BSE on October 28. 2,954 or 45% from 1-year low.

Maruti is also included in Dividend King shares. In the financial year 2012, the company paid an overall dividend of 1,200% 60 per equity share. Currently, its dividend yield is around 0.6 per cent.

In the second quarter of FY23, the company posted a net profit of More than 4 times the PAT of Rs 2,061.5 crore — 475.3 crore in the same quarter last year. Net sales jump 47.9% 28,543.5 crore in Q2FY23 19,297.8 crore in the second quarter of the last financial year.

Further, in Q2FY23, Maruti sold a total of 517,395 vehicles during the quarter, which is the highest in any quarter. Sales in the domestic market stood at 454,200 units. Exports stood at 63,195 units.

As of the end of September 2022 quarter, Maruti had around 412,000 pending customer orders, of which around 130,000 vehicle pre-bookings are for the recently launched models.

Is it a good idea to buy Maruti shares after Q2 results?

Mitul Shah, Head of Research at Reliance Securities said, “Maruti Suzuki delivered a strong performance in 2QFY23 as its EBITDA margin stood at 9.3% (YoY 509bps/204bps QoQ up), versus our estimate of 9.6%. Revenue growth of 46% 299.3 billion YoY (up 13% QoQ), roughly in line with our estimate of 298bn. Revenue growth by ASP growth of 7% YoY and 2% QoQ to Rs 5,78,490 and 36% YoY (up) volumes The increase was on account of growth of 11% QoQ) to 5,17,395 units. EBITDA came in at Rs 27.7 billion (up 224% YoY and 45% QoQ), on account of favorable exchange due to operating scale and lower RM prices from our estimates of Rs 28.7 billion rate. Its PAT grew by 334% (104% QoQ) on a year-on-year basis to Rs 20.6 billion, which is roughly in line with our estimate of Rs 20.4 billion.

Shah further added, “We believe that better product-mix, possible ease of production, price hikes and stable RM environment will further support MSIL’s margin expansion. Besides, lower commodity cost on margins will be fully realized. The impact will be visible on P&L. 3QFY23E onwards.”

The Reliance Securities expert said the company plans to introduce more vehicles, including more CNG variants, in the existing product portfolio. Further, it expects a better response for the hybrid segment than the electric vehicles during the next 1-2 years due to various factors. The recent launch of the new Grand Vitara with 75K bookings indicates that there is a strong response to new products with 35% strong hybrids in the order book of the Grand Vitara.

Moreover, Maruti expects most of the new bookings to be tilted towards the top variant, resulting in better ASP and margins.

The stock brokerage expert believes that its product pipeline will remain strong in FY13 with a number of new launches (especially in the SUV segment), fresh and growing CNG options. This will help in increasing its market share and driving incremental growth going forward. MSIL’s healthy CAPEX plan on capacity and network expansion will aid in further penetration and volume growth of the industry.

“We expect favorable currency effect on export realization and lower import cost (due to weaker JPY) will flow through P&L 3QFY23 onwards. These factors will propel its margins towards double digits in 2HFY23E. We expect that Its EBITDA margin will increase to 9.3% from the current 9.3%.11.8% in FY24E,” Shah said.

Shah further said, “We expect MSIL’s domestic volumes to see a growth of 26% in FY23E. We anticipate a healthy 15% CAGR for exports in FY22-FY24E based on better sales through Toyota tie ups. With improved volumes and ASP factoring, we revise our revenue projections to 4% and 5% for FY23E and FY24E.”

Further, Shah concluded that “We believe that increased production on account of easing of the issue of semi-conductor supply, favorable currency and stable input costs will improve MSIL’s operating margins. Hence, we estimate our EBITDA for FY23E.” Increases margin estimates to 60bps/76bps. /FY24E. Accordingly, we increase our EPS by 15%/11% for FY23E/FY24E. Strong product basket, market share, strong return ratio and potential margins In view of the improvement, we reiterate our BUY rating on MSIL: Revised target price of Rs 11,000, Valuation of the stock at Revised P/E multiplier of 27.5x.

Meanwhile, analysts at ICICI Direct said in a report, “MSIL share price has grown at a CAGR of 2.2%. 8,114 levels in October 2017, largely in tandem with the Nifty Auto Index at the moment.”

Analysts further said, “We continue to maintain our buy rating tracking industry of the domestically underpaid PV segment, benign RM price outlook and strong order book,” adding, “Upgrading our estimates, we now value MSIL. give At FY24E EPS of 11,200 ie 32x P/E 350/share (first target price 10,000).”

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.