While the order book for Maruti’s new models – Brezza and
– remains strong, the addition of two new models in its portfolio (Jimny and Fronx) may lead to the order book starting to again pick up, analysts said.
After ending Tuesday with a 3.4% gain,
shares were little changed in Wednesday’s trade.
The auto major yesterday said its net profit for the December quarter more than doubled on year to Rs 2,351 crore, and beat ET Now Poll of Rs 1,873 crore.
Here’s what brokerages are saying:
The global brokerage is overweight on the auto stock with a target price of Rs 10,483. It said the Q3 report card was impressive and sees product mix and market share improvement ahead. Maruti is Morgan Stanley’s top pick in autos.
BofA has maintained a buy rating on the stock with a target price of Rs 10,600 per share. It said the power of mix, new launches and benign raw materials is starting to play out.Kotak Institutional Equities
The domestic brokerage has maintained a sell rating on the stock with an increased fair value of Rs 7,850. It said the margin trajectory is likely to lag expectations, led by growth moderation in the entry-level segment, which will increase discounts, and unfavorable forex and uptick in base metal prices.
Emkay said new products will drive growth ahead and gave a target price of Rs 10,700 with a buy rating. “Q3 EBITDA grew by 82% YoY to Rs 28.3 bn, standing 8% above our estimate owing to gross-margin beat. Gross margin expanded by 260 bps YoY, on account of better net pricing, improved mix and favorable currency movement,” it said.
New launches are expected to generate volume growth in the medium term, Sharekhan said while maintaining a buy rating on the stock.
Nuvama Institutional Equities
At its current valuation, Maruti Suzuki will benefit from a strong franchise, product cycle tailwind, favourable product mix, and commodity benefits – outstripping margin concerns, it said. The target price has been increased to Rs 11,291.
ICICI Securities has a DCF-based target price of Rs 10,455, implying 23x FY25E core EPS. “Keeping our FY24E earnings largely unchanged, we increase our ASP estimate by ~4% and also cut EBITDAM by 100bps to ~11.5%,” it said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)