In early trading session on Monday, Maruti Suzuki’s stock price surged over 2% following the company’s announcement of robust Q4 results. Maruti Suzuki shares climbed by as much as 2.2% to reach Rs 12,966 each on the BSE, propelling its market capitalization above Rs 4 lakh crore.
Maruti Suzuki in Q4FY24
Maruti Suzuki India, the country’s leading passenger car manufacturer, disclosed a net profit of Rs 3,878 crore in Q4FY24, marking a substantial 48% growth compared to Rs 2,623 crore in the same period last year.
During the quarter, the company’s revenue from operations experienced a notable uptick of 19.3%, reaching Rs 38,235 crore from Rs 32,048 crore year-over-year (YoY).
Additionally, Maruti Suzuki India achieved a significant milestone by surpassing 2 million units in total sales for FY24. Total sales volume during the March quarter surged by 13% to 584,031 units compared to 514,927 units in the corresponding period last year.
Brokerages on Maruti Suzuki India
Motilal Oswal on Maruti Suzuki India
Motilal Oswal reiterates a ‘BUY’ recommendation with a Target Price of Rs 14,700, based on 26 times FY26 EPS. Currently, the stock is trading at 25 times and 22.5 times FY25E and FY26E consolidated Earnings Per Share (EPS) respectively.
According to the latest report from Motilal Oswal on Maruti Suzuki India, the financial outlook for FY25-26 has been marginally raised by 2-4%. The report forecasts Maruti Suzuki to maintain its outperformance relative to industry growth in FY25.
Despite the majority of input cost benefits likely being realized, the company is anticipated to achieve approximately 70 basis points margin improvement to around 12.5% in FY25, primarily driven by an enhanced product mix.
This projected improvement is expected to fuel a steady 13% earnings Compound Annual Growth Rate (CAGR) over the period FY24-26E.
The report also suggests that any potential GST cuts or favorable policies regarding hybrids by the government could lead to a rerating of Maruti Suzuki’s stock, as the company stands to be a key beneficiary of such changes.
Elara Securities on Maruti Suzuki India
According to a recent report from Elara Securities on Maruti Suzuki India, the fourth-quarter profitability was impacted by one-off expenses and a lower CNG mix, although experts anticipate a reversal in this trend.
Realization per vehicle saw a notable improvement of 10% year-on-year in FY24, and approximately 37% compared to FY21, attributed to the acceptance and success of Maruti Suzuki India’s higher-priced brands in the UV segment. The fiscal year 2024 also witnessed a remarkable growth of around 53% year-on-year in EBIT per vehicle to Rs 62,655, surpassing the earlier peak in FY18 by about 20%, highlighting an enhanced product mix.
Despite weakness in the entry-level car segment limiting the rise in volume market share to 60 basis points versus FY23 levels, there was a notable increase in revenue market share by 220 basis points year-on-year, driven by the success of newly-launched, higher-priced models.
Key factors to monitor, considered as triggers for the stock, include the return of first-time car buyers (down to 40-43% in FY24 from a peak of 48%), industry growth in FY25-26, and any potential hybrid tax cuts. Elara Securities has raised the FY25E-26E EPS estimates by approximately 5-6% each and introduced FY27E estimates.
The broking firm revised the target of Maruti Suzuki India to “Accumulate” from “Buy” given the sharp ~27% rally in the stock price over the past three months. The target price has been raised to Rs 13,722 from Rs 13,004 earlier, driven by the upward revision of EPS estimates and a PE of 26x (unchanged) FY26E P/E.
Stock performance in last one year
In terms of stock performance, Maruti Suzuki shares have demonstrated positive returns across multiple time frames. Over the past month, the stock has given a commendable 3% return, showcasing its stability and growth potential. The last six months have seen even more impressive results, with a substantial increase of 23.58%, indicating a strong upward trend.
Year-to-date, Maruti Suzuki shares have surged by 24.94%, reinforcing the stock’s positive momentum in the current fiscal year. Looking at the broader picture, the stock has delivered an impressive return of over 46.21% in the last twelve months, emphasizing its sustained growth and attractiveness to investors.
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