Maruti Suzuki India shares fell nearly 3% on January 29 after brokerages reviewed the company’s December quarter results, pointing to continued pressure on margins even as demand remained strong and order books stayed healthy. In its post-results note dated January 28, Nomura said Maruti Suzuki’s focus on driving volumes in the lower-end segments, coupled with rising costs, could keep profitability under strain in the near to medium term, despite robust sales growth and low dealer inventory.
Motilal Oswal and JM Financial, while more optimistic on the stock, also acknowledged that cost headwinds weighed on quarterly performance.
Nomura on Maruti Suzuki India: ‘Neutral’
Nomura has maintained a ‘Neutral’ rating on Maruti Suzuki India with a target price of Rs 16,118, implying an upside of about 8% from the January 28 closing price of Rs 14,877. The brokerage said Maruti Suzuki’s adjusted EBIT margin of 8.9% in the December quarter came in below its estimate of 9.9%, mainly due to higher raw material costs, price cuts on entry-level cars and adverse cost absorption. Nomura noted that average selling prices declined 2.3% quarter-on-quarter to Rs 7,12,000, sharper than its expectation of a 1% drop.
“MSIL’s focus is on driving volumes in lower segments as it is undertaking capacity expansion and also has a much higher market share at lower price points,” Nomura said, adding that “this will likely come at the cost of margins as costs have flared up.”
While management highlighted strong demand, a pending order book of 175,000 units, and dealer inventory of just three days, Nomura said the rising share of SUVs in the industry could make it difficult for Maruti Suzuki to gain market share over the medium term. The brokerage has cut its EBIT margin estimates for FY26 to FY28 and reduced its earnings forecasts by 8–11% to factor in sustained cost pressure.
Motilal Oswal on Maruti Suzuki India: ‘Buy’
Motilal Oswal has reiterated a ‘Buy’ rating on Maruti Suzuki with a target price of Rs 18,197, indicating an upside of around 22% from current levels. The brokerage said Maruti Suzuki’s adjusted profit after tax rose 16% year-on-year to Rs 4,250 crore in the December quarter, though it was below estimates due to cost pressures. Motilal Oswal pointed out that EBITDA margins expanded only 40 basis points quarter-on-quarter to 12.4%, as higher input costs, lower availability of rare earth magnets and price reductions offset the benefit of strong volume growth.
“Despite pricing pressure, MSIL has refrained from taking a price hike on its models as it would look to take advantage of the current demand momentum,” the brokerage said. Motilal Oswal added that GST rate cuts and a healthy pipeline of new launches are expected to support market share recovery, while exports are likely to remain a key growth driver. It expects Maruti Suzuki to deliver an earnings CAGR of about 16% over FY25–FY28, driven by volume growth and exports.
JM Financial on Maruti Suzuki India: ‘Buy’
JM Financial has maintained a ‘Buy’ rating on Maruti Suzuki and raised its target price to Rs 19,350, which implies an upside of about 30% from the prevailing market price. The brokerage said adjusted EBITDA and EBIT margins of 12.4% and 8.9%, after excluding a one-time labour code provision of Rs 590 crore, were supported by strong operating leverage from higher volumes. However, JM Financial also flagged that margins were hit by higher commodity costs, price reductions and unfavourable fixed-cost absorption.
“Operating margins were impacted by adverse raw material costs, price reductions and fixed cost incidence, whereas strong operating leverage and lower discounting partially offset these headwinds,” JM Financial said.
It noted that domestic demand remained strong, particularly in the entry-level segment, with dealer inventory at three to four days and discounts remaining negligible. The brokerage said it expects operating leverage to continue supporting margins and sees scope for price increases in the coming months, even as some commodity-related pressure may persist.
Conclusion
Brokerage reports on Maruti Suzuki’s December quarter results present a mixed picture, with all firms agreeing on strong demand, low inventory and healthy export momentum, while differing on the durability of margins. Nomura remains cautious, citing sustained cost pressure and a focus on lower-priced segments, while Motilal Oswal and JM Financial are more positive on earnings growth and valuation upside. For now, the stock’s movement reflects the market’s sensitivity to margin trends, even as volumes and demand indicators stay firm.