Maruti share price jumps 1%, tops Rs 8,750 after Q1 results; analysts see 24% rally, buy, sell or hold?

Maruti Suzuki share price jumped 1.3 per cent to Rs 8,770.85 apiece on BSE on Thursday, after the company reported a 130 per cent on-year surge in net profit

Maruti share price jumps 1%, tops Rs 8,750 after Q1 results; analysts see 24% rally, buy, sell or hold?

Maruti Suzuki share price jumped 1.3 per cent to Rs 8,770.85 apiece on BSE on Thursday, after the company reported a 130 per cent on-year surge in net profit at Rs 1,012.80 crore in the June quarter. The company posted a profit of Rs 440.80 crore in the same quarter last year. The stock had hit a 52-week low of Rs 6,540, since then the stock has risen more than 34 per cent in nearly 5 months. The revenue for the quarter jumped 51 per cent on-year to Rs 25,286.30 crore compared with Rs 16,798.70 crore in the corresponding quarter last year. At least four research and brokerage firms have recommended to buy the stock and see up to 24 per cent upside potential. Maruti Suzuki India said that the increase in prices of commodities adversely impacted the operating profit and that the automaker company was forced to increase prices of vehicles to partially offset this impact.

Motilal Oswal Financial Services

BUY | Target Price: Rs 10,700 | Upside: 24%

Analysts said that strong demand and favorable product lifecycle for Maruti Suzuki augurs well for its market share and margins. Motilal Oswal expects a recovery in 2HFY23 in both market share and margins, led by an improvement in supplies, favorable product lifecycle, improved mix, as well as RM/FX benefits and operating leverage. It added that the stock trades at 37.7x/23x FY23E/FY24E consolidated EPS. 

JM Financial Services

BUY | Target Price: 10,300 | Upside: 19%

Analysts said that the recent correction in commodity costs and favourable impact of currency movement will start reflecting from 2QFY23 margins. It has estimated revenue / EPS CAGR of 18% / 82% over FY22-24E. After two consecutive years of volume decline, JM Financial believes that Maruti Suzuki is at the cusp of a new upcycle. “New model launches in the coming months, healthy order book and commodity/currency tailwinds will further support strong performance going ahead,” it said.

ICICI Direct Research

BUY | Target Price: Rs 10,000 | Upside: 15%

Analysts said that Maruti SUzuki’s stock price has grown at ~2.3% CAGR from Rs 7,630 levels in July 2017, in tandem to the broader Nifty Auto index this time. “We retain our BUY rating tracking healthy demand prospects, robust orderbook & encouraging customer response to new launches in the SUV space. MSIL is best placed to play upon the underpenetrated PV category domestically,” it said. The research firm has revised its target price to Rs 10,000 from Rs 9,630 earlier.

LKP Securities

BUY | Target Price: Rs 9,739 | Upside: 12%

Analysts said Maruti Suzuki reported a weak margin performance in the quarter on higher input costs and discounts. The demand is going quite strongly driven by personal mobility themes, first time buyers, new variant launches and CNG variants, it said. “Going forward, with supply issues getting resolved sooner or later, we believe that the strong order book, newer launches, digitization of sales, expanding dealer network, higher capacity utilization rates, softening of commodities, favourable currency movement and price hikes should trigger a superior volume and margin profile in the ensuing years,” it said in a report.

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