Target price of Maruti Suzuki shares raised after Q3; stock inches higher

“A large pending order book of ~363,000 units, along with recently launched products, provides strong sales visibility for subsequent quarters. We expect FY23E revenue growth to be strong at 32%, and the uptrend FY23-25E revenue CAGR is likely to remain at 14%. Driven by improved scale and pricing, we expect EBITDA margin to expand. We increase FY23E EPS by 7% to Rs263 on higher margin and other earnings assumptions, said brokerage MK, which has retained Buy rating. Maruti Suzuki stock with a target price of 10,700/share (from 10,500 earlier).

Major downside risks, according to MK, could include macro slowdown, lower-than-expected volumes in new products, higher competitive intensity and adverse commodity/currency rate movements.

Analysts at Prabhudas Lilladher remain positive on the auto stock as they believe the company will make market share gains and filling white space in the UV portfolio will lead to an increase in ASPs, with a c260bps increase in EBITDA margin on the back of commodity costs ( over FY23-25E) softening and higher UV share and rural revival. reiterated ‘Buy’ with revised target price of 10,600 ( 10,000 earlier).

“Maruti share price has depreciated at around 1.3% CAGR 9,280 level in January 2018, underperforming the broader Nifty Auto index. We retain our buy rating tracking, refocus on SUVs, market share capture ambitions, strong order book with clear timeline and target price for EV launch 11,200 per share,” ICICI Securities, another domestic brokerage and research firm, said in a note.

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